TaxTMI 
TaxTMI 
2024 (1) TMI 887
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.... Order, the Learned Commissioner has confirmed the proposals in the show cause notice with respect to appellant providing accommodation and travel services to the personnel of their customers, after dropping the demand in respect of accommodation service for the period upto 30.06.2012, holding that 'short-term accommodation service can be taxed only when it is provided by hotels, etc. or entities engaged in provision of such services'. The following demands were confirmed in the First Order - (I) Rs. 1,03,95,608/- being the Service Tax payable on Accommodation service by M/s HSBC Electronic Data Processing India Pvt. Ltd., in terms of Section 73(2) of the Finance Act,1994; (II) Rs. 18,29,072/- being the Service Tax payable on Rent a cab service by M/s HSBC Electronic Data Processing India Pvt. Ltd., in terms of Section 73(2) of the Finance Act, 1994; (III) Rs. 6,36,38,134/- being the Service Tax payable on Intermediary services by M/s HSBC Electronic Data Processing India Pvt. Ltd., in terms of Section 73(2) of the Finance Act,1994; (IV) Payment of interest, at applicable rates, on the Service Tax demanded and confirmed at (I) to (III) above, in terms of Section 75 of th....
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....iness Partners and provides the 4.4 It is submitted that the appellants are answerable in terms of the subcontracting agreement only to HGRL, UK and the compensation provided is on cost-plus basis. There is no principal-agent relationship since it is provided in the sub-contracting agreement that the appellants render services to HGRL as independent contractors i.e. on principal-to-principal basis. Therefore, there is no service provided as intermediary and the export of services even for these elements of services will also be determined under Rule 3 of the POPS and not under Rule 9(c) as claimed by the department. 4.5 In support of his contentions he has relied upon the following Orders/Judgments- * Commissioner of Goods and Services Tax, Gurgaon - II Vs. Orange Business Solutions Private Limited [2019-VIL-332-CESTAT-CHD-ST] * Macquarie Global Services Private Limited Vs. CCE & ST, Gurgaon - I [2021- VIL-704-CESTAT-CHD-ST] * Genpact India Private Limited Vs. UOI &Ors [2022-VIL-751-P&H] * Verizon Communication India Private Limited Vs. Assistant Commissioner, Service Tax, Delhi - III &Anr. [2017-VIL-469-DEL-ST] * Commissioner of Central Tax Vs. M/s Singtel Global India....
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....T] * Advance Steel Tubes V COC ST [2019-TIOL-3353-CESTAT-All] * Emami Paper Mills Limited Vs. COCGST, Bhubaneshwar [2022-VIL-835- CESTAT-KOL-CE] 4.13 He prayed that the extended period of limitation cannot be invoked and finally prayed that the appeals be allowed. 5. On the other hand learned Authorized Representative appearing for the Revenue stated that, as per the show cause and the Order-in-original, the elements of service namely, expenses for providing accommodation and rent-a-cab for foreign customers during their visit to India, should be taxed under the respective categories and not treated as export of services. The outbound call and debit/credit card collections have been rightly held as intermediary services. In this regard, he has reiterated the findings in the impugned Orders based on the show cause notices 6. Heard both sides at length and examined the case records. 7. The following issues arise for determination - * Whether the services provided by the appellant in connection with sales and services and collection services can be classified under the category of intermediary services? * Whether the services provided by the appellant to the personnel of f....
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....ve and Regulatory Requirements; (ii) ''Agreement'' means this agreement together with its schedules (as may be amended by the parties from time to time); (iii) ''Business Partner'' means each of the HSBC Group Members to which HGRL has agreed to provide services and in respect of which (i) HGRL has entered into a Master Services Agreement; and(ii) HGRL wishes to sub-contract such services to the GSC; (iv) ''Business Partner Representative'' means in the case of each Business Unit of a Business Partner, the officer or person specified in paragraph 2 of the relevant Schedule B (or such other officer or person as the Business Partner may designate in writing from time to time) who is responsible for the day-to-day liaison with the HGRL Representative and the GSC Representative(s) and for monitoring the performance of the relevant Services by HGRL and the GSC; (v) ''Business Unit'' means any of the business or operating units of a Business Partner to whom HGRL provides services from time to time, and in respect of which (i) a Schedule Band Schedule(s) C have been completed; and (ii) HGRL wishes to sub-contract ....
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....nt(s) will reflect the levels of service and performance that HGRL has undertaken to the Business Partner that it will meet with respect to the provision of the Services, and in turn, the levels of service and performance that the GSC undertakes to HGRL to meet with respect to the provision of the Services. Upon execution of each Performance Level Agreement, its terms are deemed acceptable by HGRL. Accordingly, the GSC shall provide the Services in accordance with the levels of service and performance set out in such Performance Level Agreement(s) and shall be directly liable to HGRL for any failure to meet such performance levels in accordance with the provisions of Clause 8 of this Agreement, as if references to the Business Partner or its designated Business Unit in such Performance Level Agreement(s) were references to HGRL. The GSC shall have no direct liability to a Business Partner or its designated Business Unit with respect to any failure to meet such performance levels. In the event of any inconsistency between Such Performance Level Agreements and the provisions of this Agreement, then the provisions of this Agreement shall prevail. 6 COMPENSATION In consideration o....
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....specify from time to time. Payment of the charges may also be effected, in any other manner as may be agreed between the GSC and HGRL from time to time. (f) Save as expressly provided under the terms of this Agreement, payment by HGRL to the GSC hereunder shall be made without any deduction or withholding and free from any set off or counterclaim. Should any applicable law at any time require any deduction or withholding to be made from a payment then (i) HGRL's liability in respect of the payment shall be for a revised amount such that after the making of such deduction or withholding the net payment shall be equal to the amount which the GSC would have received had no such deduction or withholding been made, (ii) HGRL shall make such deduction or withholding, and iii) HGRL shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law. 7. INSPECTION AND AUDIT (b) Without prejudice to Clause 7(a) above whenever GHRL and/or the Business Partner shall so request by written notice to the GSC then HGRL and/or the relevant Business Partner (through the appropriate HSBC Group internal audit function or ....
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....senger transportation service The place of provision in respect of a passenger transportation service shall be the place where the passenger embarks on the conveyance for a continuous journey. 10. It is also necessary to take into account some of the Orders/ Judgments relied upon by the learned Counsel for the Appellants. * In Commissioner of Goods and Services Tax, Gurgaon - II Vs. Orange Business Solutions Private Limited [2019-VIL-332-CESTAT-CHD-ST], the facts were that the Respondents in that case had rendered services to the Orange Group of Companies on direction of Group entity. The role of the Respondent was to provide outsourced services and there was no privity of contract with any customer of Orange Group entities. In that case, the Orange group had shared service centers which catered to the global entities for back office support. The consideration was provided by ENSIL. After noting the Guidance Note of the CBIC dated 20.06.2012, and the terms of the agreement it was held as follows - "10. From the above Guidance Note of CBEC dt.20.6.2012 and definition of intermediary, the following conclusion has drawn: (a) An intermediary arranges or facilities a provisio....
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....y in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act"), hereby clarifies the issues in succeeding paragraphs. 2. Scope of Intermediary services 2.1 'Intermediary' has been defined in the sub-section (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as "IGST" Act) as under- "Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account." 2.2 The concept of 'intermediary' was borrowed in GST from the Service Tax Regime. The definition of 'intermediary' in the Service Tax law as given in Rule 2(f) of Place of Provision of Services Rules, 2012 issued vide notification No. 28/2012ST, dated 2062012 was as follows: "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilit....
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....sion "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 that intermediary "does not include a person who supplies such goods or services or both or securities on his own account". Use of word "such" in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of "intermediary". 3.5 Subcontracting for a service is not an inte....
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....inition there should be two or more persons besides the service provider. In the present case, the appellants are providing services to their parent company at Japan and they did not involve in any manner in the activity of negotiation for sale and purchase of goods in India or collection of sale proceeds from customers on behalf of the parent company, hence cannot be called as an 'intermediary' and, accordingly, do not fall under Rule 9(c) of the Place of Provisions of Service Rules, 2012". It was therefore held that there is no intermediary in this case. * The next decision referred to is in the case of Genpact India Private Limited Vs. UOI &Ors [2022-VIL-751-P&H] where also the petitioners were providing support services on behalf of the overseas entity (GI). After examining the terms of the services sub-contracting agreement in that case, the Hon'ble High Court held as follows - "The recitals of the MSA provide that GI has subcontracted the petitioner for providing the services to its customers. It is clear there from that the petitioner is engaged by GI for actual performance of BPO services and information technology services to the customers of GI. Petitioner would b....
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....the delivery of BPO services to the customers of GI under the MSA. iv) Petitioner issues invoices to GI and receives payment from GI in convertible foreign exchange as its service fee." The MSA dated 01.01.2013 (Annexure P1) entered between the petitioner and GI is clearly for the purpose of subcontracting services to the petitioner by GI. These are the very services which GI was contractually supposed to provide to its own customers ... A perusal of the definition of "intermediary" under the service tax regime visavis the GST regime would show that the definition has remained similar. Even as per circular dated 20.09.2021 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (GST Policy Wing), the scope of "intermediary" services has been dealt in para 2 thereof. In para 2.2 it stands clarified that the concept of "intermediary" was borrowed in GST from the Service Tax Regime. The circular after making a reference to the definition of "intermediary" both under Rule 2 (f) of the Place of Provision of Service Rules 2012 and under Section 2 (13) of the IGST Act clearly states that there is broadly no cha....
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....is satisfied by the provision of service who has to be treated as recipient of the service, not the person or persons affected by the performance of the service. Thus, when the person on whose instructions the services in question had been provided by the agents/subagents in India, who Is liable to make payment for these services and who used the service for his business, is located abroad, the destination of the services in question has to be treated abroad. The destination has to be decided on the basis of the place of consumption, not the place of performance of Service." 52. In Vodafone Essar Cellular Ltd. v. CCE (supra), the CESTAT explained the arrangement lucidly in the following words: "Your customer's customer is not your customer. When a service is rendered to a third party at the behest of your customer, the service recipient is your customer and not the third party. For example, when a florist delivers a bouquet on your request to your friend for which you make the payment, as far as the florist is concerned you are the customer and not your friend." ... Summary of conclusions 54. To summarise the conclusions: (i) It made no difference that Verizon Ind....
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....as intermediary services. After consideration of Rule 6A of the Service Tax Rules and Rule 2(f) of the Place of Provision of Service Rules, the Hon'ble High Court held as follows - "18. On a careful perusal of the terms and conditions of the aforesaid Agreement dated 14 July 2011 between SingTel and SGIPL, we find no legal infirmity or irrational approach adopted by the learned CESTAT when it comes to conclude that SGIPL is not providing 'intermediary services'. The plea that SGIPL is not providing any services on its own account is misplaced. It is manifest that there is no contract between SingTel and service providers in India like Airtel, Vodafone, Reliance etc., and the agreement between SGIPL and SingTel is on principal to principal basis. Indeed, SGIPL has entered into separate contracts with the telecom operators in India but on its own account and not as in the nature of a broker or agent for SingTel. The above referred communication dated 16 March 2012 also supports such a disposition. The agreement envisages that SGIPL has to provide, at its own expenses, all necessary infrastructure in order to provide the services to SingTel and its customers. It further envisages t....
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....of export with effect from 1.10.2014 under the Place of Provision of Services Rules, 2012, holding that the appellant had facilitated supply of goods between its foreign counterpart and processing of goods and thus, it should be considered as an intermediary. On perusal of the contracts, I find that the service fee charged by the appellant to its overseas group entities for provision of service has no direct nexus with the supply of goods by the overseas group entities to its customers in India. Further, the appellant had provided the service to the overseas entities on principal to principal basis. Thus, the appellant cannot be termed as an intermediary between the overseas entity and the Indian customers. It is an admitted fact on record that the consideration received by the appellant for providing the services was based upon cost plus markup and is nowhere connected with the main supply of goods. In other words, the main supply may or may not happen and thus, cannot be directly correlated with the service provided by the appellant. Thus, the appellant is not acting as a bridge between the overseas group entities and supplies made to their customers in India and accordingly, it ....
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....here is a connection with the terms of the sub-contracting agreement, these expenses are to be recovered in terms of Schedule B of the sub-contracting agreement. Ultimately, it is for the HGRL, UK to agree for payment and we find that there is no dispute that these invoices have been recovered in convertible foreign exchange. It is also seen from the sample invoices shown to us for reimbursement of expenses, that these have been submitted to the Software Technology Parks of India (STPI) authorities and the Software Export Declaration is furnished at Page 325 to 330 of the Appeal Paper Book and have been treated as part of the same contract. 17. At any rate, for the service to be classified as rent-a-cab in terms of Section 65(91), upto 30.06.2012, the service is to be provided by a person engaged in the business of renting of cabs, which is not the case in the context of the present appellants. Also, with respect to the period after 01.07.2012, the transportation services cannot fall under Rule 11 of POPS, for determining the place of provision as taxable territory, as in the facts of this case it does not satisfy the definition of 'continuous journey' as per Rule 2(d) of the said....