2019 (6) TMI 271 - AT - Service Tax

Refund of accumulated CENVAT credit - Export of services or not - POPOS Rules - Intermediary services or not - Bundled services or not - Whether the Services provided by the claimant to Globecast, located outside in respect of Broadcast of Russia Today channel in India is export of service or otherwise? - Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT - In the present case the Channel Carriage for which Channel Carriage Fees is paid by GlobeCast, to Channel Distribution Partner through claimant is the main service which has been provided by the Channel Distribution Partner and not the claimant who has acted only to mediate the provision of service by the Channel Distribution Partner to GlobeCast. This service has in no manner been provided by the claimant to the GlobeCast. In our view the services of mediation of this nature are covered by the term intermediary as defined by Rule 2(f) of the Place Of Provision of Services Rules, 2012. Since these services are covered by the term intermediary, in term of Rule 9 ibid, the place of provision of these services will be the location of the service provider that is in India. Hence these services cannot be considered as export of service as per Rule 6A of Service Tax Rules, 1994. In terms of 6A(1)(d) for a service to qualify as export of service the place of provision service should be outside India. Since in the present case these services have been provided in India as per Place of Provision of Services Rules, 2012 they cannot be termed as export of services. Intermediary services or not? - HELD THAT - In the present case the except for routing the payment through LAMHAS, who have entered into the Channel Distribution Agreement with Channel Distribution Partners, the services of Channel Carriage were provided by the Channel Distribution Partners to TV-NOVOSTI directly. Hence the services provided by the LAMHAS in this respect qualify as intermediary services . Bundled services or not - HELD THAT - The present case is not a case of bundled services, naturally bundled, but is case of providing services which as per the contract itself are not bundled together and hence needs to be examined on its own. In the present case the Channel Carriage Service is in no way provided by the claimant on his own account, and hence is an intermediary service. Thus the Channel Carriage Fees which is towards the Channel Carriage by Channel Distribution Partners cannot be added to the export turnover for determination of the refund of accumulated CENVAT Credit in terms of Rule 5 of the CENVAT Credit Rules, 2004. However the charges recovered as Lamhas Professional Fee and Lamhas Service Fees which are towards the services provided by Claimant to Globecast on their own account will continue to be part of the Export Turnover of the claimant - refund is to be allowed. The matter remanded back to the original authority for redetermination of the amount of refund as per Rule 5 of CENVAT Credit Rules, 2004 - appeal allowed by way of remand.

Summary

Issues Involved:
1. Whether the services provided by the claimant to Globecast for the broadcast of "Russia Today" channel in India qualify as export of services.
2. Whether the claimant qualifies as an intermediary under the Place of Provision of Services Rules, 2012.
3. The eligibility of the claimant for a refund under Rule 5 of the CENVAT Credit Rules, 2004.

Issue-wise Detailed Analysis:

1. Whether the services provided by the claimant to Globecast for the broadcast of "Russia Today" channel in India qualify as export of services:
The claimant contended that the services provided to Globecast should be considered as export of services under Rule 6A of the Service Tax Rules, 1994, and therefore, they should be eligible for a refund under Rule 5 of the CENVAT Credit Rules, 2004. They argued that they fulfilled all the conditions prescribed by Rule 6A, including the service provider being located in India, the service recipient being located outside India, and the payment being received in convertible foreign exchange. However, the revenue argued that the services provided by the claimant were consumed in India, and thus, did not qualify as export of services. The tribunal held that the services provided by the claimant did not qualify as export of services as the place of provision of these services was in India, as per Rule 9 of the Place of Provision of Services Rules, 2012.

2. Whether the claimant qualifies as an intermediary under the Place of Provision of Services Rules, 2012:
The revenue argued that the claimant acted as an intermediary between Globecast and the Channel Distribution Partners in India, facilitating the distribution of the "Russia Today" channel. The tribunal examined the agreement between the claimant and Globecast and concluded that the claimant was indeed acting as an intermediary. The tribunal noted that the claimant was not providing the main service on its own account but was arranging for the provision of services between Globecast and the Channel Distribution Partners. Therefore, the claimant fell within the definition of an intermediary as per Rule 2(f) of the Place of Provision of Services Rules, 2012.

3. The eligibility of the claimant for a refund under Rule 5 of the CENVAT Credit Rules, 2004:
The tribunal held that since the services provided by the claimant were intermediary services, the place of provision of these services was in India. Consequently, these services could not be considered as export of services under Rule 6A of the Service Tax Rules, 1994. As a result, the claimant was not eligible for a refund under Rule 5 of the CENVAT Credit Rules, 2004, for the Channel Carriage Fees. However, the tribunal allowed the refund for the "Lamhas Professional Fee" and "Lamhas Service Fees," which were for services provided by the claimant on their own account.

Conclusion:
The tribunal allowed the appeals filed by the revenue and remanded the matter back to the original authority for redetermination of the refund amount as per Rule 5 of the CENVAT Credit Rules, 2004. The appeals filed by the claimant were disposed of in line with the tribunal's observations.