2018 (7) TMI 436 - AT - Service Tax

Refund of unutilized Cenvat credit - intermediary services in terms of Rule 2(f) of Place of Provision of Rules, 2012 - POPOS Rules - location of service provider - reverse charge mechanism - Held that - Identical issue decided in appellant own case M/S. EVALUESERVE. COM PVT. LTD. VERSUS CST, GURGAON 2018 (3) TMI 1430 - CESTAT CHANDIGARH , where it was held that The appellant are not intermediaries in terms of Rule 2(f) of the Place of Provision of Service Rules, 2012. Therefore, the appellants are not liable to pay service tax being provider of service in India in terms of Rule 9 of the Place of Provision of Service Rules, 2012. Following the judgement, the refund is allowed - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004.
2. Classification of services provided by the appellant as intermediary services under Rule 2(f) of Place of Provision of Services Rules, 2012.
3. Applicability of Rule 9 of Place of Provision of Services Rules, 2012.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claim under Rule 5 of Cenvat Credit Rules, 2004:
The appellant’s refund claim for the period April 2012 to September 2013 under Rule 5 of Cenvat Credit Rules, 2004, read with Notification No. 27/2012 dated 18.06.2012, was initially sanctioned by the Adjudicating Authority. However, the Commissioner (Appeals) reversed this decision, holding that the appellant was providing intermediary services and thus required to pay service tax under the reverse charge mechanism. Consequently, the appellant’s refund claim for unutilized Cenvat credit was denied.

2. Classification of Services as Intermediary Services:
The core of the dispute revolves around whether the appellant’s services qualify as intermediary services under Rule 2(f) of the Place of Provision of Services Rules, 2012. The definition of "intermediary" includes brokers, agents, or any person who arranges or facilitates the provision of a service or supply of goods between two or more persons but does not include a person who provides the main service on his account. The Tribunal examined the agreement between the appellant and Evalueserve Ltd., Bermuda, and concluded that the appellant provided services directly to the customers of their client, without facilitating or arranging services provided by third parties. Thus, the appellant acted as the main service provider on a principal-to-principal basis, not as an intermediary.

3. Applicability of Rule 9 of Place of Provision of Services Rules, 2012:
Rule 9 specifies that the place of provision for intermediary services is the location of the service provider. The Commissioner (Appeals) had applied this rule to hold that the appellant’s services were provided in India and thus subject to service tax. However, the Tribunal found that the appellant’s services did not qualify as intermediary services. The Tribunal referenced similar cases, such as those involving M/s. LBF Travel India Pvt. Ltd. and GoDaddy India Web Services Pvt. Ltd., where it was established that entities providing services on their own account, even if interacting with customers on behalf of a client, do not fall under the intermediary category.

Conclusion:
The Tribunal concluded that the appellant’s services were not intermediary services under Rule 2(f) of the Place of Provision of Services Rules, 2012, and therefore, Rule 9 did not apply. Consequently, the appellant was not liable to pay service tax in India, and the refund claim for unutilized Cenvat credit was admissible. The Tribunal set aside the impugned order and allowed the refund claim with consequential relief.

Final Order:
The appeal was allowed, and the impugned order was set aside, granting the appellant the refund claim with consequential relief, if any. The decision was pronounced in the open court.

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