TaxTMI 
TaxTMI 
2024 (1) TMI 887
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....by this common order. 2. In the First 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 ....
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....rvices Agreement (Intra-Group Services Agreement). The appellant has performance level agreements with the Business 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....
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....he following judgments - • GD Goenka Private Limited Vs. COGST, Delhi South [2023-VIL-798- CESTAT-DEL-ST] • Tata Steel Limited Vs. CCE & ST, Jamshedpur [2019-VIL-1303-CESTATKOL- ST] • 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 - â€....
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....''Additional Country Specific Terms'' means any additional terms that have been agreed between the HGRL and certain of its Business Partners set out in Schedule D to the Master Services Agreement, comprising additional terms relevant to the provision of services generally to the Business Partner to which the Schedule D relates, including such terms as are necessary to ensure that such services are provided in accordance with such Business Partner's Legislative 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 ....
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....ement;and (iv) HSBC Group standards. ... (c) The GSC shall ensure that the Services are performed with due diligence and skill at all times during the Term and that the Designated Employees and/or Contractors have the qualifications and expertise necessary to perform the Services. ... (m) The GSC shall enter into Performance Level Agreements directly with each Business Partner or designated Business Unit with respect to the provision of the Services as agreed between the GSC and the Business Partner (or its designated Business Unit). The Performance Level Agreement(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 ....
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....9;business as usual'' basis (as recorded in writing) or such other date as the parties may agree. (e) The GSC will send an invoice to HGRL at during the second week of each calendar month (or at such other time each month as may. be agreed from time to time)in respect of the charges payable and expenses recoverable for the previous month in such currency /currencies as the parties may agree from time to time. HGRL shall arrange for payment of the amount specified in each invoice within 35 calendar days of receipt of the invoice by crediting the amount, or arranging for the amount to be credited, to such account as the GSC may 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 suc....
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....le property The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or coordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located. • Rule 9 Place of provision of specified services The place of provision of following services shall be the location of the service Provider :... (c) Intermediary services; • Rule 11 Place of provision of passenger 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....
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.... coordinate bench of Macquarie Global Services Private Limited Vs. CCE & ST, Gurgaon - I [2021- VIL-704-CESTAT-CHD-ST], where in the context of similar arrangement of back office support services and IT/ITES services to overseas group companies, after taking note of the Circular No 159/15/2021- GST dated 20th September, 2021 it was observed as follows - "4.6 Similar view has been affirmed vide the Circular No 159/15/2021GST dated 20th September, 2021, issued by the Board though in relation to similar provisions under GST, stating as follow: "Subject: Clarification on doubts related to scope of "Intermediary"-reg. Representations have been received citing ambiguity caused in interpretation of the scope of "Intermediary services" in the GST Law. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity 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. S....
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....stinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; (1) Main supply, between the two principals, which can be a supply of goods or services or securities; (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary 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 provider 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 in....
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.... of intermediary services or location of the recipient of intermediary services is outside India." 4.6 In the decision of CESTAT in Orange Business Solutions Pvt Ltd, supra and also the Circular issued by the Board, the basic characteristics, of the intermediary has been clearly spelt out. Also in the case of JFE Steel India Pvt Ltd [2021 (44) G.S.T.L. 292 (Tri. - Chan)], same has been held stating as follows: 7.......... 'Intermediary Service' has been defined under Rule 2(f) of the Place of Provision of Service Rules, 2012 reads as follows :" (f) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account;" A simple reading of the aforesaid provisions makes it clear that to attract the said definition 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 i....
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....to GI and its customers. Clause 5.4 obligates the petitioner to retain records and books in accordance with records retention standards in accordance with law or as required by GI. Clause 7 provides that the service levels mentioned in the Customer Statement of Work, would be used as criteria to measure the performance of the petitioner. Clause 10 of the MSA lays down the manner in which the petitioner would raise invoices on GI for the services rendered. Clause 16 provides that if the petitioner fails to perform any of the obligations under the MSA or under the Customer Statement of Work, GI may then terminate the contract. The MSA bears out the arrangement between GI and the petitioner and the same may be summarized as below: i) "GI has service agreement for providing BPO services with respective GI customers at global level. GI issues invoices and receives remittance from the GI customers. ii) GI under the MSA subcontracted the execution of the BPO services to the petitioner. iii) Petitioner executes 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 ....
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....e 'users' of the services provided by Verizon India but are not its recipients .. 49. The position becomes even clearer in the post July 2012 period during which the POPS Rules 2012 apply. As already noted provision of telecommunication services does not have a specific rule and so Rule 3 of the POPS Rules, which is the default option, applies. In terms thereof, the place of provision of telecommunication service shall be the location of the recipient of service. 51. In the considered view of the Court, the judgment of the CESTAT in Paul Merchants Ltd v. CCE, Chandigarh (supra) is right in holding that "The service recipient is the person on whose instructions/orders the service is provided who is obliged to make the payment from the same and whose need is satisfied by the provision of the service." The Court further affirms the following passage in the said judgment in Paul Merchants Ltd v. CCE, Chandigarh (supra) which correctly explains the legal position: "It is the person who requested for the service is liable to make payment for the same and whose need is satisfied by the provision of service who has to be treated as recipient of t....
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....on US were 'related parties' was not a valid ground, in terms of the ESR or the Rule 6A of the ST Rules, to hold that there was no export of service or to deny the refund. (v) The Circular dated 3rd January 2007 of the CBEC had no application to the case on hand. It did not pertain to provision of electronic data transfer service. It was wrongly applied by the Department. With its total repeal by the subsequent Circular dated 23rd August 2007, there was no question of it applying to deny the refund for the period January 2011 till September 2014. (vi) Even for the period after 1st July 2012 the provision of telecommunication service by Verizon India to Verizon US satisfied the conditions under Rule 6A (1) (a), (b), (d) and (e) of the ST Rules and was therefore an 'export of service'. The amount received for the export of service was not amenable to service tax." • In Commissioner of Central Tax Vs. M/s Singtel Global India Private Limited [2023-VIL-606-DEL-ST], where the Respondents were providing global telecommunication and ancillary support services to Singapore based entity, the question was whether such services would qualify as i....
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....place in terms of the Performance Level agreement (PLA). Even here, as provided in the PLA, the terms of the subcontracting agreement shall always prevail in case of any conflict. The responsibility and liability is only between the appellant and the group entity - HGRL from whom compensation is received on cost-plus basis in convertible foreign exchange. It is well settled in terms of the decisions cited by the learned Counsel in Genpact (supra) and Singtel (supra) that where the relationship between the parties is on principal to principal basis, such an arrangement cannot come within the purview of intermediary services. 12. Also, the sub contracting agreement shows that the compensation is on cost-plus basis In similar case, such an arrangement, it was held in Lubrizol Advanced Materials India Private Limited Vs. CCEx., Belapur [2019-VIL-38-CESTATMUM- ST (SM)] also referred to in Chevron Philips Chemicals India Private Limited Vs. Commissioner of Central Tax and Central Excise, Navi Mumbai [Order No. A/86318/2022 (DB)] that there is no intermediary service. In Lubrizol (supra) it was observed as follows: "6. I find that the learned Commissioner (Appeals) has denied ....
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....)(a), will qualify as part of main service. 14. For all these reasons, we hold that the elements of service, namely collection services and contact center services for credit/debit card operations, cannot be held to be intermediary services and we set-aside the findings in this regard in Para 47 of the First Order and Para 32 of the Second Order. 15. With regard to the issue of reimbursement claimed by the appellant for accommodation and cab charges, incurred by the appellant on behalf of HGRL/Business Partners, we find that the show cause notice issued vide O. R. No. 15/2016-ADJN (COMMR) ST dated 28.01.2016, at Para 3.2 stated that 'the services in question namely accommodation and rent-a-cab are separately discernible from the main service i.e. back office services and has no connection or relation with such main service' (emphasis supplied). However, the Learned Commissioner at Para 15 of the First Order held that the purpose of the visits is connected with the original service. Again at Para 16 of the First Order, the learned Commissioner has recorded the finding that 'these agreements require certain level of contact and coordination or liaison between the parties concer....