TaxTMI 
TaxTMI 
2024 (12) TMI 1786
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....n the similar issue and aggrieved by the impugned order the appellant filed these 3(three) appeals. As the issues involved are common, these appeals are taken together for hearing and disposal by this order. 2. The issue in the present appeal is whether the activity carried out by the Appellant with their overseas service recipient can be considered as 'export of service' or whether is classifiable as 'intermediary' service leviable to service Tax. 3. The brief facts are Appellant M/s. Amazon Seller Services Private Limited, (ASSPL) is a Private limited company incorporated in India and engaged in providing brand marketing and promotional services to M/s. Amazon Group Entities, namely Amazon Web Services (AWS), Amazon Media EU, Sarl, Luxemburg (AMEU) and M/s. Bladen Inc., NV Services Inc., which are located outside India. Alleging that the services provided by the appellant are 'intermediary' services, periodical show cause notices were issued. On adjudication as per the impugned orders, the demand of service tax along with interest was confirmed and penalties were imposed. Aggrieved by the said orders present 3(three) appeals were filed. The relevant ....
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....vided by the appellant, Learned Sr. Counsel submits that actual services are provided by the Appellant to each of these overseas service recipients, separately. Appellant had entered into separate Marketing Services Agreements with AWS, AMEU, Bladen and Support Services Agreement with NV Inc., Services. The allegation of the department is that the activities performed by the Appellant for AWS, AMEU, Bladen and NV Inc., Services (hereinafter collectively referred to as overseas service recipients) are 'intermediary' services. Learned Sr. Counsel further submits that the findings in impugned orders are based on incorrect understanding of the facts and issue by presuming that the marketing services provided by the Appellant to AMEU/Bladen and to AWS are of the same nature. The marketing services provided by the Appellant to AMEU/Bladen were the same, but under two different agreements, what was done for AMEU till 31.03.2014 was done for Bladen w.e.f 01.04.2014. The business of AMEU/Bladen, its reasons for entering into a marketing services agreement with the Appellant and the activities undertaken by the Appellant for AMEU/Bladen are entirely different from that of AWS and NV ....
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....llant, with the objective of promoting the Amazon brand name in India. While the agreement with AMEU was effective till 31.03.2014, there were certain year-end adjustments and services in respect of the month of March 2014 which were billed by the Appellant during the period between April 2014 and September 2014. As regards the Marketing Services to AMEU (till 31.03.2014) and to Bladen (from 01.04.2014), Learned Sr. Counsel submits that the Appellant has obtained the rights to operate the www.amazon.in and junglee.com in India from Bladen. Having obtained the rights, the Appellant operates the marketplace business on amazon.in and junglee.com in India. In furtherance of its marketplace business, the Appellant enters into contracts with interested sellers for listing of products on amazon.in or jungle.com and appellant provides listing and other support services (hereinafter referred to as the marketplace service) to the sellers who opt to register themselves. The Appellant discharges Service Tax on the entire consideration received by it from the sellers for the listing and other support services provided. The agreements between the Appellant and the sellers in India are on princip....
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..... The memorandum will continue until such financial year as the licensee incur losses in said financial year within 30 days of the end of the financial year from which the licensee starts earning profit before tax, the parties will mutually agree to the rate at which the licensee shall pay a royalty to the licensor for the financial year, wherein the licensee has earned such profit. 9. In Appeal No. ST/21398/2017, the Learned Sr. Counsel draws our attention to the agreement dated 01.04.2011 between M/s. Amazon Seller Services Pvt., Ltd., in India, the Appellant and M/s Amazon Media EU Sarl in Luxembourg. As per Exhibit 'B' to the agreement, the services include brand marketing, following any trademark usage guidelines provided by the Appellant and general marketing and promotion services. As per the said agreement, the status and liabilities of the parties as specified are reproduced below :- "5.1. Relationship Between Parties: Unless otherwise set forth in Exhibit A or Exhibit B or as otherwise authorized in writing, no Party has any authority of any kind to enter into agreements or licenses in the name of or binding on any other Party, or offer or create any w....
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....ary services are not satisfied in the present case due to following reasons :- (i) The Appellant does not act in the capacity of broker or agent or any other similar person for AMEU/Bladen (ii) In the absence of a main service from AMEU/Bladen, the question of Appellant facilitating or arranging a provision of service or supply of goods between AMEU/Bladen and any other person does not arise (iii) The appellant provides services to the sellers in India on its own account by paying service tax and hence falls out of the definition of intermediary. 12. Learned Sr. Counsel further submits that the fulfillment of above tests are necessary pre-conditions to qualify as 'intermediary services' in the Education Guide. It is further fortified by the discussions of the GST Council and the clarification issued by CBIC vide Circular No. 159/15/2021-GST dated 20.09.2021. The issue also stands settled in favor of the Appellant in light of the Advance Rulings by Authority of Advance Ruling and decisions of the Hon'ble Tribunal in several cases. 13. The Learned Sr. Counsel also draws our attention the CBEC Education guide and the same is extracted below....
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....ng brand marketing and promotional services to AMEU / Bladen, the Appellant does not qualify as an 'intermediary' as per the definition of the term provided under Rule 2(f) of the POPS Rules. Learned Sr. Counsel also submits that as per Rule 2 (f) of POPS Rules, an '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". On the analysis of the definition, it is evident that the following conditions must be cumulatively satisfied for a person to qualify as an 'intermediary service' provider. The first condition to be an 'intermediary' is that the person must be a broker/agent or any other person by whatever name called. This condition is directly connected with the relationship between the service provider (Appellant) and the service recipient (AMEU/Bladen). The service provider must be appointed as an agent of the service recipient (principal). If the transaction between the....
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....ing on any other party, or offer or create any warranty or other obligation, express or implied, on behalf of any other party. Any services performed by a Party pursuant to this Agreement are performed by such Party as an independent contractor on a non-exclusive basis, and nothing in this agreement creates a partnership, joint venture, franchise or agency relationship between the parties as a result of this Agreement .... " 18. As regards expanding the scope of any other person by whatever name called in the definition of the intermediary, the Learned Sr. Counsel draws our attention to the judgment of the Hon'ble Supreme Court in the matter of Commissioner of Income Tax, Udaipur Vs. M/s Mack dowel & Company Ltd., (2009 (5) TMI-28-SC) and submits that such a phrase is in the company of other words which are specific in nature. Then the scope of this phrase ought to the ascertained from the accompanying words and thus the word does not expand the scope of the definition of intermediary beyond the pre- requisite of an agency relationship which was discussed and not satisfied in Appellant's case. In this regard, the Learned Sr. Counsel relied on the judgment of the Hon'....
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.... basis to the sellers of Bladen and service tax is paid on the consideration received. Appellant maintains and operates the e-commerce portals and not Bladen. However, the Respondent wrongly presumed that Bladen/AMEU maintains the e-commerce portal and provides the e-portal to retailers for carrying out the e-commerce business and the said finding in the impugned order is factually wrong. AMEU provides e-portals to retailers for carry out the e-commerce business for a consideration which is normally depending on the percentage of sales. For the purpose of including more number of retailers in their portals, AMEU has entered into agreement with appellant. Amazon as a brand entered into the Indian market and since the brand was at a nascent stage, brand value of Amazon was to be created in the Indian market. With this view AMEU entered into marketing services agreement. As per the terms and conditions of agreements, appellant is undertaking number of promotional events such as dance shows, sponsoring events such as IPL, displaying advertisement on social, print media, TV channel etc., to promote and market the Amazon brand in India and creates awareness about the two platforms jungle....
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....n to the Appellant. Appellant received consideration for its services on cost plus market basis. Therefore, this condition for being an 'intermediary' is also not satisfied. 22. Learned Special Counsel / Authorized Representative (AR) for the Revenue submits that the issue involved in the appeals is the interpretation of the nature of service provided by the appellant to its foreign counterpart in the context of the definition of 'intermediary services' means all general marketing and promotional services that may include, but are not limited to the services mentioned in the agreement and the service fees is mentioned as the Recipient shall pay or cause to be paid to provider as fees for services to be performed (Fees) an amount equal to the costs, plus an amount equal to the Costs multiplied by the Costs Percentage(s) set forth in Schedule I, along with such other fees as the Parties may agree upon". In schedule 1, the Cost percentage(s) is mentioned as 15%. From the above, it emerges that the ASSPL is carrying out Marketing service in a substantial way to the service offered by Bladen/AMEU to the Indian sellers the service being the provision of Amazon web mark....
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....tated or arranged the supply of services from AWS/AMEU to the customers/retailers". 23. Learned Special Counsel / Authorized Representative (AR) for the Revenue further submits that as per the submission made by the appellant, the appellant has obtained the right to operate the amazon.in and jungle.com in India from Bladen. Having obtained the rights, the appellant operates the market place business on Amazon.in and Junglee.com in India. This makes it clear that, the appellant is involved in a substantial activity in promotion of the main service and not only involved in helping the Indian sellers to get listed in the website as claimed by the appellant. Since, the impugned order has reasoned well on these lines, the demand and penalty are sustainable. Learned Special Counsel also submits that the appellant is involved in marketing the services of AWS/AMEU to the customers in India. The activities of the appellant amount to provision of marketing and support services to AWS/AMEU against receipt of a consideration. The main service is provided by AWS/AMEU to customers in India and appellant facilitates the provision of such service. Therefore, appellant is the provider of the mai....
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....ct has to be considered as whole and not to classify the activity by considering the selective conditions of the contract. Learned Special Counsel also draws our attention to the licensing agreement entered by the appellant with M/s. Bladen Inc. on 01.01.2013 wherein it is specifically stated that appellant desires to license certain intellectual property from licensor M/s. Bladen Inc. Learned Special counsel also draws our attention to the agreement where it is specifically stated that "Licensor Intellectual Property" is limited to mean the e-commerce technologies and brand names used in the provision of e-commerce services and URLs and IP addresses, including those containing the domain name or IP address appearing in www.amazon.in, junglee.com, amazonservices.in, or others as appropriate. And also, further draws our attention to the clause-2 of the agreement regarding license and Royalties and ownership ; License to Licensee. During the Term of this Agreement, Licensor grants Licensee and successors, the following non-exclusive, terminable, revocable right and license to the Licensor Intellectual Property, solely for the Licensed Purpose within the Licensed Territory, t....
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....zon Services Business Solutions Agreement ("Business Solutions Agreement"), and, unless specifically provided otherwise, concern and apply only to your participation in FBA, BY REGISTERING FOR OR USING FBA, YOU (ON BEHALF OF YOURSELF OR THE BUSINESS YOU REPRESENT) AGREE TO BE BOUND BY THE AND THESE FBA SERVICE TERMS. Unless defined in these FBA Service Terms, all capitalized terms are as defined in the Business Solutions Agreement. Shipping to amazon F.3.1. Except as otherwise provided in Section F-5, for the Amazon Site you register Units in connection with, such Units will be delivered to customers in India only. You will ship Units to us in accordance with applicable Programme Policies for the Amazon Site Your Products are registered in connection with. You will ensure that: (a) all Units are properly packaged for protection against damage and deterioration during shipment and storage; (b) terms of freight "C.I.P. (Carriage and Insurance Paid) Destination"; and (c) all Units comply with Amazon's labelling and other requirements. You will be responsible for all costs incurred to ship the Units to the shipping destination (including costs of freight and trans....
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....es apart from listing the products on the website, all on behalf of Amazon (AMEU/Bladen). Responsibility of the process involving sale of the goods after listing also is taken care of by appellant. The agreement talks about the Fulfilment by Amazon Service (FBA) for the products. FBA is operated by Amazon Seller Services Private Limited. Thus, appellant takes the responsibility of the products registered in FBA, including storage, customer returns, customer service, compensation etc., which are listed in the agreement. Learned Special Counsel (AR) submits that as evident from the above conditions appellant was not acting independently and due to that reason the activity cannot be considered as carried out on principal to principal basis. 27. In view of the above, it is very clear that the provision of service (web marketplace) between Amazon (by AMEU/Bladen) and the Indian sellers is arranged in such a scheme of marketing, the tripartite agreement will not be there. Appellant has been given the right over operating the web market place (amazon.in and jungle.com) and facilitated by promoting the brand name and popularising the web platform through advertisements and also offer....
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....;intermediary services' as discussed above and hence is taxable under Service tax. As regards any conclusions drawn for AWS / NV Services they are automatically applied to the AMEU / Bladen, it is submitted that the sample agreements between appellant and Indian customers furnished by appellant pertaining to Bladen, AMEU, AWS and NV Services are identical in language and terms. Thus it is very clear that the provision of service(web market place) between Amazon (by AMEU/Bladen) and the Indian sellers is arranged and facilitated by promoting the brand name and popularising the web platform through advertisements and also offering guarantee of improved sale through support activities mentioned in the agreement between appellant and Indian sellers by the 'intermediary' appellant on behalf of the principal for which they are remunerated. Thus the services provided come under the category of "Intermediary services" and by considering the Rule 9(c) of the Place of Provision of Services Rules, 2012, the consideration received from their principals is leviable to Service tax. 30. In rejoinder Learned Sr. Counsel draws our attention to the Circular No. 2001/08/2002. The appel....
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.... services shall consist of service described therein which include communication of approved promotion and campaign details and other marketing activities and parties may agree to from time to time. 31. On re-joinder, Learned Sr. Counsel for the Appellant also drew our attention to the submissions placed by Learned Special Counsel (AR) and his reliance on the Business Solutions Agreement (BSA) entered into between the Appellant and the sellers in India including M/s. Sektra Marketing Services Private Limited to put forth the argument that the Appellant provides several different services to the sellers in India in terms of the BSA and that the said services are provided on behalf of AMEU/Bladen. In this regard, Learned Sr. Counsel for the Appellant submits that the aforesaid submission is factually misplaced and lacks merit. As is evident from the reading of the BSA, the same is entered into between the Appellant and the sellers. There is no mention of AMEU/Bladen in the entire agreement. This agreement has been entered into on principal-to-principal basis between the Appellant and the sellers for provision of services in respect of the marketplace that is operated by the Appell....
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....ore Pte Ltd. (SFDC, Singapore) with the Appellant, where it is specifically stated that the SFDC, Singapore and Appellant desire to enter into an arrangement whereby Appellant will provide services in support of SFDC, Singapore business operations within its designated territory as defined in Exhibit 'A' subject to limitation provided by the agreement. Appellant shall assist SFDC, Singapore in marketing the products and services, shall educate potential customers regarding the use of the product through advertisement, if required by SFDC, Singapore. However, the Appellant shall not have the authority to conclude sales contract in the name or on behalf of the SFDC, Singapore. As regards receipt of payment, the Appellant is not permitted to collect payment from SFDC Singapore's customers and if any amount is received, it should be promptly paid to the SFDC, Singapore. As held in the matter of M/s. Blackberry India Pvt. Ltd. (supra) an 'intermediary' is a person, who arranges or facilitates provision of the main service between two or more persons. We find that the appellant does not arrange or facilitate the provision of any main supply between M/s. Sales force.co....