AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1464
X X X X Extracts X X X X
X X X X Extracts X X X X
....iversal Milling Machines developed or manufactured by various foreign suppliers viz., M/s HNK Machine Tool Co. Limited, Korea, M/s Goratu Maquinas Herramienta, S.A., Spain etc., who are selling these locally to their customers directly. For the above purpose, the appellants had entered into agreements dated 04.04.2014 and 25.06.2014 with the foreign clients. The appellants have paid service tax in respect of such services provided to their foreign clients 'under protest' out of precaution and on their own account. For the purpose of payment of service tax on taxable output services and for compliance with the Service Tax statute, they are registered with the jurisdictional Commissionerate under service tax registration No. AAACE 2757RSD009. 2.2 The appellants by contending that the services provided by them were received by their clients situated abroad i.e., outside the taxable territory and that since they had received Foreign Inward Remittance Certificates (FIRCs) from their clients, stated that they are eligible for refund of service tax, by treating it as export of services in terms of Rule 3 of Place of Provision of Service (POPS) Rules, 2012. In this regard, the appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....refunds as upheld in the impugned order, he submitted that the agreements entered into by the appellants with their clients had clearly demarcated their role in providing the services only to their foreign clients and they are not directly providing any services to the customers of their clients in India. Further, he stated that the benefits of the services provided by them were accrued to their clients situated abroad and they are eligible to claim refund of service tax paid on such export of services. Therefore, he claimed that the rejection of refunds upheld by the learned Commissioner (Appeals) is contrary to the factual position and thus it is liable to be set aside. 3.3 Furthermore, learned Advocate submitted that in the case of appellants themselves for the subsequent period, on the remand direction of the Commissioner (Appeals) in one case and on their own in other cases, the jurisdictional Assistant/Deputy Commissioners had sanctioned the refund claims for the subsequent period; and the department had accepted these refund sanction orders and the same has been not appealed against. The details of such orders as given by him are as follows: Date of Refund claim Ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce to the product requirement, and inform the same to client. (b) Informing the client for the upcoming projects in the whole Indian Territory with details of contract, nature of project, total investment and persons to be contacted and machines to be offered. Consultant shall send their field observations and reports to the client about requirement pattern, potential user (c) Informing the client about the High value Investment in various sector like automobile, Farm Equipment, General Engineering, Tool Room, steel, Oil & Gas, Infrastructure and Power etc. Consultant shall no where act on behalf or under authorization of company or end user nor the consultant reserves or is entrusted with the right of acting as a broker or agent of client in whatsoever capacity or facilitator or any person in such capacity and meaning, between the client and prospective end user but his role shall be restricted towards merely providing information and data study in terms of acceptability, usability compatibility of products. (d) Providing information on Global/limited tenders published or expected to be published with expected time of finalization. (e) To....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding Consultancy & Support Services in India where the said services are used or consumed and therefore the location of service receiver will be India i.e. within a taxable territory and that Service tax will be payable even if payment is received in foreign currency in view of the provisions of Rule 4 of the POPS Rules, 2012. On the other hand, the appellant had contended that the service tax is not payable by them as they are not covered under Rule 4 of the Place of Provision of Services Rules 2012 and the services provided by them to their foreign clients are covered under Rule 3 of Place of Provision of Services Rules 2012. xxx xxx xxx xxx 9. In the instant case, the appellants have submitted copies of consulting and business support agreement between them and their clients namely 1) Parpas, Italy, 2) Jobs SpA, Italy 3) Goratu, Spain. 4) Moore Tool, USA 5) Wuhan Heavy Duty Machine Tool Group Corp, China 6) WFL Millturn Technologies, Austria etc. which shows that they are providing Services to their clients outside taxable territory which includes, among others, identifying the requirement of potential users in India for the products of clients by help of qualified e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent and its user in accordance to the product requirement and inform the same to foreign clients and thus the benefit of the services accrues only to the clients available in India. Since the services are provided in relation to the goods and since it is in India where the said services are finally consumed therefore, as discussed supra, the location of service receiver will be India as per the provisions of Rule 4(a) of the Place of Provision of Services Rules, 2012 and thus the services of Consultancy & Support Services provided by the appellant is taxable and the appellant is required to pay the service tax on the said services and accordingly the appellant had misconstrued that no service tax is payable by them and thus the different case laws relied by the appellants are of no avail. In view of that I hold that the adjudicating authority had rightly observed that the service tax will be payable by the appellant and since the service tax is payable by the appellant, the impugned order of the lower adjudicating authority rejecting the refund claim needs no interference and is upheld." 9.2 The relevant provisions of the Place of Provision of Service Rules, 2012 under whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmed. In terms of sub-rule (a) to Rule 4 ibid, where the performance of the service involves goods, then it has been provided that the services provided in respect of the goods, which are required to be made physically available by the recipient of service to the provider of service, shall be the place where the services are actually provided by engaging with the goods made available to the service provider. The modus of provision of services adopted by the appellants in providing consultancy services, support services etc., does not involve goods supplied by the overseas manufacturers/client. Such services through involve details about product application, compatibility, usability etc., about the products, does not require that the goods shall be supplied by the overseas clients to provide consultancy service. Therefore, in our considered view, the case of the appellants should appropriately fall under Rule 3 of the Rules of 2012, for consideration as 'export of service' and not under Rule 4(a) ibid as held by the authorities below. Further, on careful examination of the nature of agreement between the appellants and the foreign entities as per the above contractual clauses vis-&a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reign exchange. xxx xxx xxx xxx 8. In response to this submission, learned Senior counsel and learned counsel for the respondents submitted that service tax is a contract based levy and therefore, it is the contract which determines the relationship between a service provider and a service recipient. Even if certain beneficiaries may be located in India, the service provider has no contractual relationship with such beneficiaries. There is no privity of contract between the beneficiary and the service provider. Therefore, the mere fact that the beneficiary of the service is located in India would not be a determinant factor for the levy of service tax under the Rules as the service is, in fact, provided to a recipient located outside India. 8.1 It was further contended on behalf of the respondent assessees that various preparatory activities, such as sourcing vendors, identifying customers etc. may occur in India but such activities alone would not mean that the service has not been exported to a party located overseas. Even if the customer has requested for some service within India, what is of significance is to whom the service is provided and where the reci....