AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1546
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the profit and statement account in the year March 2014, Appellant had received certain amount under the category of marketing and support services. Since Appellant was a subsidiary of holding company of M/s. Plansee SE, Australia, (herein after referred as M/s. Plansee) said amount is accounted under the Revenue head 'Marketing and support services'. On further enquiry, the Appellant had submitted that it is the cost of recovery of their sale office located at Bangalore from their holding company along with service charge of 10% thereon by raising service invoice on a monthly basis. Alleging that the activity carried out by the Appellant is falling under the category of intermediary for the sale of products in the name and on account of the Plansee, proceedings were initiated to recover the service tax and as per the impugned order, the Adjudication authority has confirmed the demand and appropriated the amount paid by the Appellant. Adjudication authority also imposed penalty under Section 78(1) of the Finance Act, 2015. Aggrieved by said order, an appeal was filed before the Commissioner (Appeals) and Commissioner (Appeals) as per the impugned order dated 18.09.2018 rejected th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the Education guide issued on 20.06.2012 where it is stated that:- "5.9.6 What are "Intermediary Services"? Generally, an "intermediary" is a person who arranges or facilitates a supply of goods, or a provision of service, or both, between two persons, without material alteration or further processing. Thus, an intermediary is involved with two supplies at any one time: i) the supply between the principal and the third party; and ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged. For the purpose of this rule, an intermediary in respect of goods (such as a commission agent i.e. a buying or selling agent, or a stockbroker) is excluded by definition. Also excluded from this sub-rule is a person who arranges or facilitates a provision of a service (referred to in the rules as "the main service"), but provides the main service on his own account. In order to determine whether a person is acting as an intermediary or not, the following factors need to be considered Nature and value: An intermediary cannot alter the nature or value of the service,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er service under Section 65B(44) of the Finance Act, 1994 and after considering the paragraph 3.3 of The Learned Counsel further draw our attention to the finding of the impugned Order-in-Original where the main contentions were considered by the Adjudication authority as follows:- "20. I have carefully gone through the contentions of the Revenue and the assessee. The main contentions are as follows: i. Whether the amounts under the head "Marketing and Support Services for the period from October 2014 to January 2015 can be considered as the remunerations received towards 'intermediary' services or not? ii. Whether the case of advance Ruling in the case of M/s GoDaddy India Web Services Pvt. Ltd dated 4th March 2016 is squarely applicable in respect to this case also, where it is held that the applicant ie., GoDaddy India Web services Ltd is not an intermediary to GoDaddy US." 6. The Learned Counsel further submits that after referring to the Merriam Dictionary for broker and the advance Ruling in the case of M/s GoDaddy India Web Services Pvt. Ltd., Adjudication Authority held that Appellant had provided intermediary service between the period....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the price to be paid and not as agent for the proceeds of the sale. The essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and will therefore be liable to account for the sale proceeds". 8. The Learned Counsel also relied on the judgment of Hon'ble Supreme court in the matter of M/s. Assam Small Scale Industries Development Corpn. Ltd. Vs. J. D. Pharmaceuticals and Another ((2005) 13 Supreme Court cases 19) where it is held that:- "25. The expressions "principal" and "agent" used in a document are not decisive. The nature of transaction is required to be determined on the basis of the substance there and not by the nomenclature used. Documents are to be construed having regard to the contexts thereof where for "labels" may not be of much relevance. The 1989 Act, the Scheme and the guidelines postulate constitution of a State Board for the purpose of monitoring supplies to various departments of the State, the government corporations and the companies. The Managing Director of the Corporation is a member of the Board in terms of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iate The petitioner is, in fact, contracted to provide the services, and is the principal service provider in the context of the services provided by it-book keeping, payrolls, and accounts through the use of cloud technology. 11. In case of intermediary services, there are three entities one providing the principal service, one receiving de principal service, and an intermediary who acts as an agent or a broker for facilitating or arranging such services for the service recipient. 12. In the present case, although the agreement does use the word 'agent' bur is clear that the petitioner is not acting as a agent for procurement of services for the service recipient. It is, in fact, providing the principal service of "Bookkeeping Payroll, and accounts, through the use of cloud technology". The fact that such services may be for the clients of the petitioner's affiliate, Boks Business Services Limited, does not make the petitioner an "intermediary". 10. To substantiate the submission that the marketing support service rendering by the appellant qualify as the export service, Learned Counsel also draw our attention to the following decisions:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nue reiterated the finding in the impugned order and also drew our attention to the illustration given by the Board as per the Circular dated 20.09.2021, as below:- 'A' is a manufacturer and supplier of a machine. 'C' helps 'A' in selling the machine by identifying client 'B' who wants to purchase this machine and helps in finalizing the contract of supply of machine by 'A' to 'B'. 'C' charges 'A' for his services of locating 'B' and helping in finalizing the sale of machine between 'A' and 'B', for which 'C' invoices 'A' and is paid by 'A' for the same. While 'A' and 'B' are involved in the main supply of the machinery, 'C', is facilitating the supply of machine between 'A' and 'B'. In this arrangement, 'C' is providing the ancillary supply of arranging or facilitating the 'main supply' of machinery between 'A' and 'B' and therefore, 'C' is an intermediary and is providing intermediary service to 'A'. 13. In rejoinder, the Learned Counsel submits that there is no commissio....