2021 (11) TMI 20 - HC - Service Tax

Levy of service tax - intermediary services or not - providing marketing support services and technical support services to Excelpoint Systems (Pvt. Limited), Singapore and having its office in India - Rule 2(f) of the Rules, 2012 - HELD THAT - Though the Tribunal has referred to the clauses and findings of the authorities, the reasoning provided to arrive at a finding in confirming the order of the authorities below is not satisfactory, we are of the considered opinion that certainly the matter requires re-examination by the Tribunal to analyze on the factual aspects to arrive at a finding, as to whether the activities of the appellant relates to provision to facilitate services or supply of goods, as the same is not forthcoming either in the orders of the authorities or of the orders of the Tribunal, in the wake of the amendment to rule 2(f) of the Rules 2012, with effect from 01.10.2014. It was mandatory on the part of the authorities to consider the scope and effect of the amended provisions and its application to the case on hand. The Tribunal ought to have examined on this aspect also. In the absence of such finding forthcoming in the orders impugned, we are of the considered view that the matter requires to be re-examined on this aspect. Matter remanded to the Tribunal to reconsider the same on these aspects - appeal allowed by way of remand.

Summary

Issues:
1. Appeal filed by Assessee under Section 35G of the Central Excise Act, 1944 challenging the final order passed by the Tribunal.
2. Whether the appellant is liable to pay service tax on services rendered to a foreign company.
3. Interpretation of the definition of "Intermediary" under Rule 2(f) of the Place of Provision of Service Rules, 2012.
4. Rejection of refund claim of CENVAT credit by the appellant.
5. Adjudication of whether the appellant's activities constitute export services.
6. Application of the judgment of the High Court of Bombay in a similar case.
7. Analysis of the clauses of the agreement between the appellant and the foreign company.
8. Consideration of legislative intent and interpretation of Rule 2(f) of the Rules, 2012.
9. Examination of the amendments to Rule 2(f) with effect from 01.10.2014.

Detailed Analysis:
1. The appellant, an Indian company, appealed against a Tribunal order regarding the liability to pay service tax on services provided to a foreign company. The appeal raised the question of law regarding the service tax liability.
2. The appellant's status as an "Intermediary" under Rule 2(f) of the Rules, 2012 was central to the dispute. The authorities concluded that the appellant fell under this definition, impacting the tax treatment of the services provided.
3. The rejection of the appellant's claim for refund of CENVAT credit was based on the classification of the appellant as an intermediary and the interpretation of export services under the relevant rules.
4. The Tribunal upheld the authorities' decision, considering the clauses of the agreement between the appellant and the foreign company. The appellant argued that the Tribunal did not adequately justify its decision.
5. Reference was made to a judgment of the High Court of Bombay to support the appellant's argument for reconsideration based on the Education Guide issued by the Central Board of Customs and Excise.
6. The legislative intent behind Rule 2(f) was debated, with the Revenue arguing that the appellant's activities aligned with the definition of an intermediary, while the appellant contested this interpretation.
7. The amendments to Rule 2(f) from 01.10.2014 were highlighted as crucial in determining the appellant's status and the tax implications of the services provided.
8. Ultimately, the High Court remanded the matter to the Tribunal for further examination, emphasizing the need to consider the amended provisions and the factual aspects of the case. The Court did not express an opinion on the merits but directed an expedited reconsideration.

This detailed analysis covers the various issues raised in the legal judgment, providing a comprehensive overview of the arguments, interpretations, and the final decision reached by the High Court.