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2021 (10) TMI 641 - AT - Service TaxRefund of service tax paid - Export of services or not - intermediary - services provided by the appellant to its parent company in Hong Kong - Period Oct 2015 to March 2016 and April 2016 to Sept 2016 - HELD THAT - Admittedly, the appellant have received the charges for their services in convertible foreign exchange. Rule 2(f) read with Rule 9 of Place of provision of Service Rules, 2012, clearly provides that intermediary which means one who procure or an agent, does not include a person who provides the main service or supply of goods on his account. The appellant have provided the services to their holding company located India outside India, on their own account. Thus, the appellant have exported their services. The appellant is entitled to refund of the service tax paid under mistake. Further, the tax has been paid under mistake, is in the nature of Revenue deposit and no limitation is attracted for refund on such deposit - the Adjudicating Authority is directed to grant the refund within a period of thirty days from the date of receipt of this order, alongwith interest @12% per annum, starting from the end of three months from the date of application (09.03.2017), till the date of disbursement of the amount. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the services provided by the appellant to its parent company in Hong Kong can be treated as export of services. 2. Whether the refund of the amount paid under mistake of law by treating such export of services as taxable service can be denied by the revenue. Detailed Analysis: 1. Export of Services: The appellant, a wholly-owned subsidiary of a Hong Kong-based company, provided services such as assistance in procurement of goods, quality checks, and timely dispatch to its parent company. The appellant received payment in convertible foreign exchange and initially did not charge service tax. However, based on incorrect legal advice, the appellant paid service tax for two periods, which was later contested. The primary contention was whether these services qualify as "export of services" under Rule 6A of the Service Tax Rules, 1994. The criteria for export of services include: - Provider of service located in taxable territory. - Recipient of service located outside India. - Service not specified under Section 66D of the Act. - Place of provision of service outside India. - Payment received in convertible foreign exchange. - Provider and recipient not merely establishments of a distinct person. The dispute centered on the last two conditions. The Tribunal concluded that the appellant and its parent company are separate legal entities and not establishments of a distinct person, referencing the Supreme Court ruling in Vodafone International Holdings BV v. Union of India and the Gujarat High Court ruling in Linde Engineering India Pvt. Ltd. v. Union of India. Thus, the services provided met the criteria for export of services. 2. Refund of Amount Paid Under Mistake of Law: The appellant filed for a refund of the service tax paid, asserting it was paid under a mistake of law. The revenue issued show-cause notices, arguing the services were intermediary services, making the place of provision in India, thus not qualifying as export of services. The Tribunal analyzed the definition of "intermediary" under Rule 2(f) of the Place of Provision of Services Rules, 2012, and concluded the appellant was not an intermediary since it provided services on its own account. Consequently, the place of provision was outside India, satisfying the condition for export of services. The Tribunal held that the amounts paid as service tax were indeed paid under a mistake of law and were in the nature of a Revenue deposit. Hence, the appellant was entitled to a refund along with interest from the date of deposit till the actual refund. Conclusion: The Tribunal set aside the impugned order, allowing the appeals and directing the Adjudicating Authority to grant the refund within thirty days, along with interest at 12% per annum from the end of three months from the date of application till the date of disbursement.
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