2019 (11) TMI 184 - AT - Service Tax

Rebate of Service Tax - exports of service or not - services of tele-communication provided by the appellant to the international inbound roamer in Indian territory and payment thereof received from foreign telecommunication service provider - principal of unjust enrichment - HELD THAT - The Tribunal in the case of M/S VODAFONE ESSAR CELLULAR LTD VERSUS CCE, PUNE-III 2013 (7) TMI 178 - CESTAT MUMBAI , dealing with absolutely identical issue, clearly held that service provided to international roamer in India is export of service on the ground that the recipient of service located out of India and the payment is received in convertible foreign exchange, even though actual user of the service is in India - The issue of unjust-enrichment was also considered in the above judgment on which it was held that in case of export of service, provisions of unjust-enrichment is not applicable. The appellant is entitled for the refund on both the counts i.e. on merits as well as on unjust-enrichment - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the telecommunication services provided by the appellant to international inbound roamers in Indian territory can be considered as export of service.
2. Whether the appellant is entitled to a rebate of service tax paid on such services.
3. Whether the refund of service tax needs to undergo the test of unjust enrichment.

Detailed Analysis:

1. Export of Service:
The primary issue is whether the telecommunication services provided by the appellant to international inbound roamers can be considered as export of service. The appellant argued that the international roamers are subscribers of foreign-based telecommunication service providers, and the payment for the roaming service is received from these foreign service providers in convertible foreign exchange. Thus, the service recipient is located outside India, qualifying the service as an export of service.

The Tribunal referenced several judgments, including Vodafone Essar Cellular Limited vs. CCE and Vodafone Cellular Limited vs. CGST, which held that when the service recipient is located outside India and the payment is received in foreign exchange, the service qualifies as an export. This is supported by the Export of Service Rules, 2005, which categorize telecom services under Category III, requiring the recipient to be located outside India and the service to be used outside India.

The Tribunal further clarified that the benefit of the service accrues to the foreign telecom service provider, not the inbound roamer, as the foreign provider can bill their subscriber for the service. This interpretation aligns with the Board’s Circular No. 111/5/2009-S.T., which states that for Category III services, the location of the service recipient is crucial, and the benefit of the service accrues outside India.

2. Rebate of Service Tax:
The appellant claimed entitlement to a rebate of service tax paid on the services provided. The Tribunal confirmed that since the service qualifies as an export, the appellant is entitled to a rebate. This conclusion is consistent with previous decisions, such as Vodafone Cellular Limited vs. CCE (2014), where the Tribunal held that services provided to foreign telecom service providers are considered exports, entitling the appellant to a refund of service tax paid on input services used in providing the exported service.

3. Unjust Enrichment:
Regarding the test of unjust enrichment, the appellant argued that once the service is deemed an export, the provisions of unjust enrichment do not apply, as per Section 11B. The Tribunal agreed, referencing multiple judgments where it was held that the principle of unjust enrichment is not applicable to export transactions. The Tribunal criticized the Commissioner (Appeals) for disregarding these judgments and relying solely on the Board Circular, emphasizing that Tribunal judgments prevail over Board Circulars, especially when the Tribunal has already considered and interpreted the Circular.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeals, confirming that:
- The telecommunication services provided to international inbound roamers are considered exports.
- The appellant is entitled to a rebate of service tax paid on such services.
- The principle of unjust enrichment does not apply to the refund of service tax in the context of export services.

The Tribunal also highlighted the importance of judicial discipline, noting that the Commissioner (Appeals) should have adhered to the Tribunal's previous judgments rather than solely relying on the Board Circular. This decision reinforces the precedence of appellate authority judgments over administrative circulars in determining tax liabilities and entitlements.

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