2023 (11) TMI 259 - AT - Service Tax

Refund of accumulated CENVAT credit - export of service or not - electronically received data is physical goods or not - HELD THAT - The original authority has held such data as physical goods and, therefore, held that place of provision of services is India. It cannot be appreciated that the contention of original authority that intangible goods are made physically available - It is noted that data is electronically received by the Appellant. The resultant product is export to United States of America and they received their remuneration in convertible foreign exchange. In view of this fact and in view of the clarification issued by the CBIC on 04.05.2018, the services involved in the present set of appeals is export of services. The appeals are allowed with a direction to the original authority to allow subject refund within a period of four weeks from passing this order.

Summary

Issues involved:
The issue involved in this case is whether the electronically received data can be considered as physical goods for the purpose of determining the place of provision of services, impacting the eligibility for refund of accumulated CENVAT credit.

Summary:
The Appellant provided support services related to data development and maintenance, information technology, outsourcing, and data processing to its holding company in the United States. The Appellant filed four refund claims for accumulated CENVAT credit, asserting that they exported services to the U.S., resulting in the credit accumulation. However, the original authority denied the refund, stating that the data received by the Appellant was considered "intangible goods made physically available" in India, thus not qualifying as an export. The Appellant appealed to the Commissioner (Appeals), who upheld the original authority's decision, rejecting the appeals. The Appellant then approached the Tribunal challenging this decision.

The Appellant argued that data is electronically available, not physically, and cited a CBEC circular stating that the location of the recipient determines the place of provision of service. They contended that since their service recipient was in the U.S., their activity constituted an export of service, making them eligible for the refund. The Authorized Representative supported the original decision.

After reviewing the submissions and records, the Tribunal found that the data received electronically by the Appellant was exported to the U.S., with remuneration received in foreign exchange. Disagreeing with the original authority's characterization of data as physical goods, the Tribunal held that the services provided by the Appellant qualified as exports based on the CBIC clarification. Consequently, the Tribunal set aside all four Orders in Appeal and directed the original authority to process the refund within four weeks.

This judgment clarifies the interpretation of data as physical goods for service provision determination and affirms the eligibility of the services provided by the Appellant as exports, entitling them to the refund of accumulated CENVAT credit.