2024 (12) TMI 678 - AT - Service Tax

Refund of CENVAT Credit on export of Business Support Services (BSS) - Classification of services provided by the appellant as Intermediary Services - non-submission of FIRC certificates. Whether the appellants have rendered intermediary services in respect of services provided by them? - HELD THAT - CBIC vide Circular No.159/15/2021-GST dated 20.09.2021 clarified Intermediary Services while making it clear that there is broadly no change in the scope of intermediary services in the GST Regime vis- -vis Service Tax Regime, except addition of supply of securities in the definition of Intermediary in the GST Law - on going through the clauses of the agreement, it is clear that the word Customer refers to M/s Saxo Bank Netherlands themselves and not to their customers. It is made very clear in the service level agreement that it is between the customer (M/s Saxo Bank Netherlands) and the provider. To that extent, it is found that the findings of the learned Appellate Commissioner are beyond the Show Cause Notice and the Original Order. It is also found that the Show Cause Notice just refers to the definition of Intermediary and assumes that the services rendered by the appellants are in the nature of intermediary, without going into the various clauses of the agreements - it is not correct for the appellate authority to hold that the appellants are rendering services to the customer of their foreign principal. On going through the different clauses of the agreement that there is nothing to indicate that the appellants are working as Intermediary as there is no mention of any service to be rendered by the appellants to any third party. Thus, either in respect of ITSS Services or BSS Services, the appellants acted as Intermediary. Whether the non-submission of FIRC certificates would dis-entitle them to the claim of refund? - HELD THAT - The impugned order holds that the appellants have not submitted some of the FIRCs though the appellant has calculated the entire receipt of foreign exchange as service exports on the basis of auditor‟s certificate while holding that the appellant is eligible for refund of unutilized credit in proportion to the remittances received by the appellant during the respective quarters - Learned Commissioner further finds that the appellant has not produced any proof of missing remittances/ FIRCs before him which were also not produced before the adjudicating authority and that auditor‟s certificate cannot be evidence of receipt of remittance - as far as the rejection of refund of Rs.6,49,068/- is concerned, the issue must travel back to the original authority in order to calculate eligible refund amount in accordance with the actual remittances received during respective quarters on the basis of the evidence that may be submitted by the appellants. The the appellants have not rendered the services of ITSS or BSS as an Intermediary and as such, the services rendered by the appellant can be classified as export of services. The appellant shall be eligible for the refund of the same - appeals disposed off.

Summary

Issues Involved:

1. Classification of services provided by the appellant as Intermediary Services.
2. Eligibility for refund of CENVAT credit on export of Business Support Services (BSS).
3. Requirement of Foreign Inward Remittance Certificates (FIRCs) for refund eligibility.

Detailed Analysis:

1. Classification of Services as Intermediary Services:

The primary issue was whether the services provided by the appellant, M/s Saxo India Pvt. Ltd., were classified as Intermediary Services under the Place of Provision of Services Rules, 2012. The Department initially classified the Information Technology Software Services (ITSS) as intermediary services, but the Commissioner (Appeals) found that the appellant was not acting as an intermediary. The tribunal noted that the appellant provided ITSS exclusively to Saxo Bank A/s, Denmark, without involvement of any third party, thus not fitting the definition of an intermediary. The tribunal referred to the CBIC Circular No.159/15/2021 which clarified that back-end services do not qualify as intermediary services, reinforcing that the appellant's services were not intermediary in nature.

2. Eligibility for Refund of CENVAT Credit on Export of BSS:

The appellant's claim for a refund of CENVAT credit on Business Support Services was initially rejected on the grounds that these services were intermediary in nature. The tribunal analyzed the service level agreement and found that the term "Customer" referred to Saxo Bank Netherlands themselves, not their customers. The tribunal highlighted that the appellant was not facilitating services between Saxo Bank and its customers but was providing services directly to Saxo Bank. Citing the case of Genpact (P) Ltd., the tribunal emphasized that the appellant was not acting as an intermediary, as they were not arranging or facilitating services between two parties but providing services directly to the principal.

3. Requirement of FIRCs for Refund Eligibility:

The tribunal addressed the issue of non-submission of Foreign Inward Remittance Certificates (FIRCs) for some transactions. The Commissioner (Appeals) had denied refund claims due to the absence of FIRCs, despite the appellant submitting an auditor's certificate as evidence of foreign exchange receipt. The tribunal remanded this issue back to the original authority, instructing it to calculate the eligible refund amount based on actual remittances received, supported by evidence that the appellant may provide.

Conclusion:

The tribunal concluded that the services rendered by the appellant were not intermediary services and thus qualified as export of services, making the appellant eligible for a refund. The Revenue's appeal against the refund on ITSS was dismissed, and the appellant's appeal regarding the BSS refund was partially allowed, with a remand to the original authority to reassess the refund based on actual remittances. This decision underscores the importance of accurately classifying services and the necessity of providing requisite documentation for claiming refunds.