2018 (4) TMI 301 - AT - Service Tax

Refund claim - export of services - Place of Provision Rules - intermediary - case of Revenue is that the appellant has been providing the intermediary service and not the export of service - Held that - the appellants are not rendering the intermediary service and they are rendering consulting engineering service and BAS and fall in the definition of export of service - After holding that the appellants are not rendering intermediary service, this case needs to be remanded back to the original authority as held by the Commissioner(Appeals) to pass a fresh order after considering all the submissions of the appellant - appeal allowed by way of remand.

Summary

Issues:
Appeals against common impugned order remanded by Commissioner(Appeals) - Whether appellant is intermediary under Rule 2(f) of Place of Provision of Service Rules, 2012 - Eligibility for refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether services provided are export of service - Burden of proof on Department - Place of provision of service - Conditions for refund under Service Tax Rules, 1994.

Analysis:
The appeals were directed against a common impugned order passed by the Commissioner(Appeals), remanding the matter back to the original authority with specific directions. The issue in both appeals was common, leading to their disposal through a single order. The details of the appeals included information on the appeal numbers, impugned order numbers, periods, amounts sanctioned, and amounts in dispute. One of the appeals, ST/21700/2017, was specifically considered for convenience.

The appellant, a private limited company, was a subsidiary of Analog Devices Holdings BV, Netherlands, engaged in providing taxable services like Consulting Engineering Services and Business Auxiliary Services. The appellant exported taxable services to its holding company without duty payment and subsequently filed a refund claim under Rule 5 of CENVAT Credit Rules, 2004. The Assistant Commissioner partly allowed the refund, which was challenged by the appellant before the Commissioner(Appeals). The Commissioner(Appeals) partially allowed the credit on various services but did not address all issues raised by the appellant.

During the hearing, the appellant's consultant argued that the impugned order was not legally sustainable as the Commissioner(Appeals) did not address the fact that the appellant was not an intermediary under Rule 2(f) of Place of Provision of Service Rules, 2012. The appellant's services were claimed to be consulting engineering services and marketing support services, not intermediaries facilitating the sale of goods. The burden of proof was placed on the Department to demonstrate the facilitation of goods sales. Various legal decisions were cited in support of this argument.

On the other hand, the Assistant Commissioner defended the impugned order, claiming that the appellant provided intermediary services, not export of service. It was argued that the place of provision of service was within India, rendering the appellant ineligible for a refund under specific conditions of the Service Tax Rules, 1994. After considering submissions from both parties and the judgments relied upon by the appellant, it was concluded that the appellant was not providing intermediary services but consulting engineering services and Business Auxiliary Services, falling under the definition of export of service.

The judgment allowed both appeals by remanding the case back to the original authority for a fresh decision, ensuring compliance with principles of natural justice and providing an opportunity for the appellant to present documentary evidence. The decision was pronounced in open court at the conclusion of the hearing.