2020 (1) TMI 1344 - AT - Service Tax

Cash Refund of the accumulated CENVAT Credit - Ship Management Service which includes crew Management service provided by the appellant to their associate overseas company at Bermuda - export of services or not - allegation that the services rendered to their overseas group companies is not an export service as defined under Place of Provisions of Service Rules, 2012 - period October, 2015 to December, 2015, April, 2016 to September, 2016 and October, 2016 to December, 2016 - HELD THAT - The undisputed facts are that by an agreement dated 1.4.2013 between the appellant (described as Ship Manager )and the overseas associate company Torm Bermuda (called as Primary Manager ), various services were agreed to be provided by the appellant to their overseas associate company. The services mentioned in the said agreement are broadly relate to Technical and Operation Services, Agency Services, SQE Services, Vetting Services, Crew Management Services etc.. The scope of each said services are narrated under various clauses of the agreement which as whole described as Ship Management service. Interpreting one of the said services particularly Agency Services , the learned Commissioner (Appeals) has concluded that the relation between the appellant service provider and the overseas service recipient are not on principal to principal basis but as a principal and agent which falls within the scope of intermediary as defined under Rule 2(f) of POPS Rules, 2012, hence not an export service. This issue has been considered by the Tribunal in the case of M/S SEASPAN CREW MANAGEMENT INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, MUMBAI 2019 (5) TMI 1813 - CESTAT MUMBAI where M/s Seaspan Crew Management Pvt. Ltd. were supplying the manpower to their overseas associate company Seaspan Canada. The allegation of the Department was that the services provided by Seaspan India to Seaspan Canada as an intermediary, hence the services rendered cannot qualify as export services, consequently, refund under Rule 5 of the CENVAT Credit Rules, 2004 is not admissible to them - This Tribunal in more or less similar circumstances held that the service provided by the assessee in the said case was not an intermediary service but on principal to principal basis, hence, eligible to refund under Rule 5 of the CENVAT Credit Rules. There are not much difference in the types of services provided by the appellant in the present case in contrast to stated case, hence, applying the principles laid down in the said judgment, it can be concluded that the service provided by the Appellant fall under the scope of export service, consequently, the impugned orders are set aside and the appeals are allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining whether Ship Management Services provided by the appellant to their overseas associate company qualify as 'export service' under Place of Provisions of Service Rules, 2012 for claiming cash refund of accumulated CENVAT Credit.

Analysis:
The appellant, a subsidiary of a Denmark-based company, provided Ship Management Services and Business Support Services to their group company in Bermuda. They claimed cash refund of accumulated CENVAT Credit for specific periods under Rule 5 of CENVAT Credit Rules, 2004. The issue revolved around whether the services provided qualified as 'export service' under POPS Rules, 2012. The appellant argued they were not intermediaries but service providers on a principal-to-principal basis, citing various services rendered and agreements with their overseas associate. They contended that since the recipient was situated outside India, the services should be considered 'export services.' They also highlighted precedents supporting their position.

The Revenue, however, supported the findings of the Commissioner (Appeals) rejecting the refund claims, emphasizing the intermediary role of the appellant based on the agreements and services provided. The Tribunal analyzed the agreements and services provided by the appellant to their overseas associate company. It focused on the Agency Services component and the definition of 'intermediary' under POPS Rules, 2012. The Tribunal noted that appointing agents and facilitating certain services did not automatically categorize the appellant as an intermediary. It emphasized that the appellant provided services on their account and not as facilitators between the overseas company and agents, falling under the exclusion clause of the 'intermediary' definition.

Referring to a similar case involving manpower supply to an overseas associate, the Tribunal concluded that the appellant's services were on a principal-to-principal basis, not as intermediaries. It held that the services provided by the appellant qualified as export services, allowing the appeals and granting consequential relief as per law. The judgment emphasized the appellant's role as service providers rather than intermediaries, aligning with past precedents and the exclusion clause of the 'intermediary' definition under POPS Rules, 2012.