2019 (6) TMI 630 - AT - Service Tax

Refund claim of service tax paid - input services - Intermediary Services or not - HELD THAT - The appellant is assisting or facilitating their principal to purchase goods from India. These services are purely between the appellant their principal and no third party is involved. Moreover, the appellant is providing only the said service which is in nature of Business Support Service and Business Auxiliary Service and the said service has been specifically excluded by the CBEC Education Guide of Taxation of Services - Admittedly, the activity undertaken by the appellant has specifically excluded from the intermediary service, in that circumstance, the refund claim filed by the appellant cannot be denied by holding that the appellant is providing intermediary service - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on intermediary services provided by the appellant.

Analysis:
The appellant entered into a sourcing agreement with a foreign company for sourcing goods from India. The appellant was registered under taxable service categories and filed a claim seeking refund of unutilized Cenvat Credits. The Assistant Commissioner sanctioned the refund, stating that all conditions were fulfilled for the services to qualify as Export of Services. However, the Department filed an appeal, claiming the appellant provided intermediary services to its foreign holding company. The Commissioner (Appeals) allowed the appeal, considering the appellant as an intermediary.

The appellant argued that they were not providing intermediary services as they were only assisting in purchasing goods for the foreign entity. They contended that as per the agreement, they were facilitating procurement and acting as a buyer's agent, which is excluded from intermediary services as per CBEC Education Guide. They cited various legal precedents to support their argument that intermediary services require two activities between principal and agent and principal and service recipient, which were not present in this case.

The Tribunal found that the services provided by the appellant were between them and their principal, with no involvement of a third party. The services were in the nature of Business Support Service and Business Auxiliary Service, specifically excluded from intermediary services as per the CBEC Education Guide. The Tribunal concluded that the appellant's activities did not fall under intermediary services, and hence, the refund claim cannot be denied on that basis. The impugned order was set aside, and the appeal was allowed with consequential relief, if any.