AI Drafter 
TaxTMI 
TaxTMI 
2023 (8) TMI 980
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....f the business in Singapore (hereafter referred to as 'I Squared') in terms of the Amended Support Service Agreement dated 06.06.2015 (hereafter 'the Agreement') constitutes export of services. The petitioner claims that the services rendered by it are export of services because I Squared, the service recipient, is located overseas. However, the respondent authorities have held, on varying grounds, that services provided by the petitioner do not qualify as 'export of services' as the place of supply of services is in India. Factual Context 3. The petitioner is a company incorporated under the Companies Act, 2013. It is engaged in the business of rendering investment advisory services related to the investment by non-resident group companies in the target companies in India, which are engaged in the transportation sector. The petitioner and I Squared belong to the same group of companies. The petitioner had entered into a Support Service Agreement on 30.05.2015 with I Squared. The scope of services to be provided under the said agreement were subsequently altered, therefore, the said agreement was terminated and the parties (the petitioner and I Squared) entered into the Amend....
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....tifying potential opportunities for investments in India, analysing investment returns and related risks, preparing report etc. basis which the overseas entity make a decision whether to make a particular investment or not." 9. The petitioner claimed that although it had provided the services from its registered place of business in Delhi, the place of supply of services was required to be considered to be overseas by virtue of Sub-section (2) of Section 13 of the Integrated Goods and Services Tax Act, 2017 (hereafter 'the IGST Act') as the location of the recipient of the service was overseas. 10. Insofar as the other grounds for proposing rejection of the petitioner's claim is concerned, the Adjudicating Authority was satisfied with the petitioner's response. The same are not subject matter of controversy in the present petitions. The petitioner's claim for refund was rejected by the Adjudicating Authority by an order dated 15.08.2020 on the sole ground that the place of supply of services was in India and therefore, the services rendered could not be considered as export of services. The relevant extract of the impugned order denying the said refund is set out below: ....
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....Authority also observed that the petitioner was providing services to customers of the service recipient and held that the petitioner was an 'Intermediary' under Sub-section (13) of Section 2 of the IGST Act. Thus, the services rendered were considered to be 'Intermediary Services'. Paragraph 5.5 and paragraph 5.6 of the findings of the learned Appellate Authority are relevant and are set out below: "5.5 I also observe from the agreement that the appellant, as an agent, identifies potential opportunities, provides analytical, operational support and market information in India for his principal's output. The appellant, in his submissions to the appeal document, stated that the services, being provided to the entities outside India, inter-alia includes identifying potential opportunities for investments in India, analyzing investment returns and related risks, preparing report etc. 5.6 Therefore, in view of the above, I find that the appellant is performing these activities in India in his liaison capacity and the person, acting in liaison capacity, has to act as go-between his principal and his principal's customers which are opportunities for investments' in the ....
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.... the IGST Act. In addition, the Adjudicating Authority also observed that the petitioner was rendering services only to I Squared and was not providing services to any other company. It also observed that "The service agreement has substantively every term and condition to make the taxpayer act as a facilitator of their services and products for their customers." Accordingly, the Adjudicating Authority held that the petitioner was an 'Intermediary' and the place of supply of services provided by it were in India. 16. The petitioner appealed against the said decision. The Appellate Authority upheld the decision of the Adjudicating Authority and rejected the petitioner's appeal. The Adjudicating Authority also observed that Cube Highways Group of Companies was engaged in construction of highways, toll operations etc. in India. And the services provided by the petitioner were in relation to immovable property in India being the roads, tolls etc. The Appellate Authority further held that such activities required the physical presence of the recipient, and the recipient was represented by the petitioner. The Appellate Authority also held that in terms of Sub-section (3)(b) and Sub-se....
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....ellate Authority against the said order. By an order dated 24.02.2023, the Appellate Authority upheld the decision of the Adjudicating Authority. The Appellate Authority referred to Clause 3 of the Agreement and observed as under: "6.2 From the above, I find that the appellant is engaged in providing marketing support services, regarding information of Indian market to identify potential opportunities in India, for and on behalf of I Squared Asia Advisors Pte. Ltd. As such, the appellant is engaged in rendering services which are for furtherance of business of the foreign entity as is evident from clause 3.7 of the agreement. As per para 3 read with clause 1.3 of the agreement, these services have been rendered by the appellant in the taxable territory i.e. India. I also find that the appellant is acting as a communication channel for I Squared Asia which is definitely with the prospective customers in India." 20. In addition, the Appellate Authority held that the petitioner was providing services on behalf of a foreign entity yet the place of supply of services was in the taxable territory, that is, India. 21. The Appellate Authority referred to the submissions file....
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.... 7.3 I find that the appellant has provided services to M/s I Squared Asia Pte. Ltd., Singapore by representing themselves physically or otherwise or by acting on behalf of M/s I Squared Asia Pte. Ltd. in India. Therefore, I find that the contentions of the appellant that the services are provided by way of reports/deliverables which are directly sent to I Squared Asia which do not require physical presence of any individual hold no ground as the term 'individual' has the same meaning as of 'the Company' or 'a Body Corporate incorporated under the laws of a country outside India. As such, I conclude that the provisions of section 13(3)(b) of the IGST Act, 2017 shall also apply in the appellant's case to determine the place of supply." 23. Thus, according to Appellate Authority, Sub-section (3)(b) and Sub-section (4) of Section 13 of the IGST Act would be applicable to the petitioner's case and the place of supply of services by the petitioner is in India. Reasons & Conclusion 24. As is apparent from the above, the petitioner was denied refund of ITC on, essentially, three grounds. First, that the petitioner is an 'Intermediary' in respect of the services provided by it t....
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.... (8) The place of supply of the following services shall be the location of the supplier of services, namely:-- *** *** *** (b) intermediary services;" 26. Sub-section (6) of Section 2 of the IGST Act, which defines the expression "export of services" is set out below: "2. In this Act, unless the context otherwise requires, -- *** *** *** (6) "export of services" means the supply of any service when,-- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;" 27. Sub-section (13) of Section 2 of the IGST Act defines the term "Intermediary" and is reproduced below for ready reference: "2. In this Act, unless the context otherwise requires, -- ....
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....he petitioner contested the aforesaid submissions. He contended that there was no dispute as to the nature of services rendered by the petitioner. He submitted that petitioner had filed responses to the show cause notices setting out the nature of services and also provided a copy of the Agreement with I Squared in terms of which services were rendered. He pointed out that the Appellate Authority had also alluded to the nature of services in the impugned orders. Thus, there was no requirement for remanding the matters for re-adjudication as the controversy involved was squarely covered by the decisions of this Court in M/s Ernst & Young Ltd. v. Additional Commissioner, CGST Appeals-II, Delhi & Anr. (supra) and M/s Ohmi Industries Asia Pvt. Ltd. v. Assistant Commissioner, CGST:2023:DHC:2440-DB. 32. Before proceeding further, it would be relevant to note that there is no real dispute that the services rendered by the petitioner are covered under the Agreement. It was contended on behalf of the Revenue that petitioner is a part of a group of companies, and some of those companies have projects in India; however, there is no material on record, which even remotely suggests that peti....
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....sia. As stated above in the scope of services, the role of Cube Highways India shall always remain that of service provider and I Squared Asia shall solely take its decisions. At its own discretion, I Squared Asia may communicate the same to Cube Highways India for further communication. I Squared Asia shall have sole and exclusive right to either accept or reject any proposal or any request and Cube Highways India shall have no say in exercise of such decision. Cube Highways India at no point in time can represent or reflect to anyone that it has the authority to negotiate and conclude any terms on behalf of I Squared Asia or its affiliates in this regard or that it can decide on acceptation / rejection of a project/ contract on behalf of I Squared Asia or its affiliates" 34. It is apparent from Clause 2, stated hereinabove, that petitioner at all time was required to act as an independent service provider and the Agreement with I Squared was on principal to principal basis. It was expressly specified in the said Clause that the petitioner is not intended to be an agent or partner of I Squared. Similarly, the last paragraph of Clause 3 of the Agreemen....
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....thority had accepted that the services provided by the petitioner included identifying potential opportunities for investments in India, analyzing investment returns and related risks, preparing reports etc. However, the Adjudicating Authority concluded that the petitioner was "...performing these activities in India in his liaison capacity and the person acting in liaison capacity, has to act as a go-between his principal and his principal's customers which are opportunities for investments' in the instant case". 39. Concededly, the said view is unsustainable. 40. The petitioner is the service provider. It is rendering the advisory services directly to I Squared and is not acting as a facilitator for providing such services. 41. 'Intermediary' as defined under Sub-section (13) of Section 2 of the IGST Act is a person who facilitates supply of services - he does not supply services himself but merely arranges the same. The Central Board of Indirect Taxes and Customs had issued a Circular dated 20.09.2021 which clearly defines the scope of 'Intermediary Services'. The relevant extracts of the said Circular are set out below: "2. Scope of Intermediary services ....
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....lary supply is supply of intermediary service and is clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. 3.3 Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of "intermediary" itself provides that intermediary service providers-means a broker, an agent or any other person, by whatever name called... "This part of the definition is not inclusive but uses the expression "means" and does not expand the definition by any known expression of expansion such as "and includes". The use of the expression "arranges or facilitates" in the definition of "intermediary" suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4 Does not include a person who supplies such goods or services or both or securities on his own account: The definition of intermediary services specifically mentions ....
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....s, accepted that the input services as claimed by the petitioner such as business auxiliary services, consulting engineers, courier expenses, management consultant, online information and database access services etc. qualified as input services and the petitioner was, thus, entitled to refund of accumulated service tax in respect of those input services. The Adjudicating Authority had thus sanctioned refund of Rs.17,75,393/- for tax period prior to July, 2017. 46. As noticed above, the definition of 'Intermediary' under Rule 2(f) of the Place of Provision of Service Rules, 2012 is similar to the definition of 'Intermediary' under Sub-section (13) of Section 2 of the IGST Act. It is not disputed that the services rendered by the petitioner were considered as export of services for the purpose of levy of service tax under the Finance Act, 1994. Concededly, the petitioner was not held to be an 'Intermediary' under Rule 2(f) of the Place of Provision of Services Rules, 2012, in respect of services rendered under the Agreement, prior to the rollout of GST with effect from 01.07.2017. 47. The petitioner's claim for refund in respect of the next two financial years, that is, Financ....
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....determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed." 51. Concededly, the petitioner has not rendered any services in more than one state or union territory as envisaged in Sub-section (7) of Section 13 of the IGST Act. Mr. Ramachandran has also made no attempt to support this conclusion. 52. Sub-section (3)(b) of Section 13 of the IGST Act is equally inapplicable. First of all, it relates to services which are supplied to an individual and which require physical presence of the recipient (or a person acting on his behalf) with the supplier of the services. There is no allegation that the petitioner has rendered any service to an individual. Plainly, the Adjudicating Authority has misunderstood the nature of services covered under Sub-section (3)(b) of Section 13 of the IGST Act. These are essentially in the nature of personal services which require the physical presence of the service recipient. A publication issued by the Central Board of Excise & Customs captioned "Taxation of Services: An Education Guide" explains the significance of the words 'physical pres....
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....ner had also provided invoices which indicated that it was charging "market services and advisory fee". 55. In view of the above, the orders impugned in the present petitions are liable to be set aside. 56. Mr. Ramachandran had filed written submissions, inter alia, praying that the matter be remanded for re-adjudication in the light of the decision in M/s Ernst & Young Ltd. v. Additional Commissioner, CGST Appeals-II, Delhi & Anr (supra) by, inter alia, praying as under: "In view of the foregoing facts and circumstances, it is respectfully prayed that this Hon'ble Court be pleased to remand the matter for re-adjudication in the light of the decision of this Hon'ble Court in the case of M/s Ernst & Young Ltd. v. Additional Commissioner, CGST Appeals-II, Delhi & Anr in W.P.(C) 8600/2022 by calling for additional documents / information if any, required." 57. However, we are unable to accept that the present petitions are required to be remanded to the Adjudicating Authority for consideration afresh. There is no material which would even remotely suggest that the services rendered by the petitioner are not as claimed, that is, advisory services relating to investmen....