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2023 (2) TMI 482 - AT - Service TaxRejection of refund of unutilised credit - Export - Place of Provision of services - Notification No. 27/2012-CE(NT) dated 18.06.2012 issued under Rule 5 of Cenvat Credit Rules, 2004 - Place of Provision of Service herein is to be decided under Rule 3 or Rule 4(a) of Place of Provision of Service Rules, 2012? - HELD THAT - Admittedly the refund claims have been filed by the appellants under Rule 5 ibid read with Notification No. 27/2012 dated 18/06/2012. The said rule provides for refund of accumulated Cenvat Credit in respect of goods and services exported under bond or undertaking. This rule is very specific and lays down how to determine the quantum of admissible refund from the accumulated Cenvat Credit. It cannot be considered to be a proceeding for denial of Cenvat Credit available in the account of the claimant and therefore even if the refund is denied, then also the amount continues to remain in the Cenvat account of the claimant. If the Revenue is not in agreement with the claims of the appellants and if, according to Revenue, the services in issue do not fall within the ambit of export of service then the Revenue ought to have initiated the proceedings against the appellants for demanding the Service Tax in respect of taxable service provided by the appellants. Admittedly no such proceedings have been initiated by the Revenue as borne out from the records of the case and therefore in a way Revenue itself has allowed this taxable service provided by appellants as export of service. If that is so then in the proceeding under Rule 5 ibid Revenue cannot deny refund by treating the service provided not to be export of service. There is no iota of doubt that the Appellant is an independent contractor and not an agent or representative or to be more precise an intermediary. They are providing the service of marketing and market research to the overseas recipient of service. The services are provided on principal to principal basis and consideration is also decided, the cost plus mark up - Undoubtedly there is no tripartite agreement at any given point of time. Rule 4 of POPS Rules, 2012 deals with the Place of Provisions in case of performance-based services and the services provided in relation to the goods required to be made physically available are only covered under the ambit of this Rule. Whereas undertaking the activities in relation to the accounting and management reporting services, the data in the incorporeal form is provided, which do not have any physical presence and hence not covered under Rule 4 ibid and the same is covered under Rule 3 ibid i.e. location of recipient of services which is overseas. The after sales support service or Engineering Support service are services which the appellant is doing in respect of providing technical parameters of the products, design and it in no way require the goods to be made physically available to the appellant i.e. service provider, therefore, for these services also place of provision has to be determined in terms of Rule 3 ibid and not under Rule 4 - As a result in the facts of the present case, the Place of Provision has to be determined in terms of Rule 3 of POPS Rules, 2012 and are not covered under Rule 4(a) ibid, therefore the services provided by the appellant to its overseas entities clearly qualify to be export and they are eligible for refund. Appeal allowed.
Issues Involved:
1. Eligibility for refund of unutilised credit under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.06.2012. 2. Determination of the Place of Provision of Service under Rule 3 or Rule 4(a) of Place of Provision of Service Rules, 2012. 3. Classification of services provided as export of services. 4. Determination of whether the appellant acts as an intermediary under Rule 2(f) of Place of Provision of Service Rules, 2012. Issue-wise Detailed Analysis: 1. Eligibility for Refund of Unutilised Credit: The appellants filed five refund claims for unutilised accumulated Cenvat Credit for the period from April 2015 to June 2016 under Notification No. 27/2012-CE(NT) dated 18.06.2012 read with Rule 5 of Cenvat Credit Rules, 2004. The Adjudicating Authority rejected these claims on the grounds that the services provided did not qualify as export of services under Rule 6A of the Service Tax Rules. The Commissioner (Appeals) upheld this decision. The Tribunal found that the Revenue had not initiated any proceedings to demand Service Tax on the transactions, thereby implicitly accepting them as export of services. Consequently, the Tribunal ruled that the appellants were eligible for the refund of unutilised credit. 2. Determination of Place of Provision of Service: The Tribunal examined whether the Place of Provision of Service should be determined under Rule 3 or Rule 4(a) of the Place of Provision of Service Rules, 2012. The Adjudicating Authority had determined the place of provision as the location of the service provider (India) under Rule 4(a), thus denying the export status. The Tribunal, however, concluded that the services provided (Marketing and Promotion Services, Engineering Support Services, etc.) did not require the physical presence of goods and should be determined under Rule 3, which considers the location of the service recipient (overseas). Therefore, the services qualified as export. 3. Classification of Services as Export of Services: The Tribunal noted that the appellant provided various Business Support Services to its overseas group entities on a principal-to-principal basis, receiving consideration in convertible foreign exchange. The Tribunal emphasized that the services were provided independently and did not involve facilitation or procurement of goods or services for the group entities. The Tribunal concluded that these services qualified as export of services, making the appellant eligible for the refund. 4. Determination of Intermediary Status: The Tribunal analyzed the definition of 'intermediary' under Rule 2(f) of the Place of Provision of Services Rules, 2012, which requires the presence of three parties: two transacting parties and one facilitating the transaction. The Tribunal found that the appellant provided services directly to its overseas entities without arranging or facilitating the supply between two other parties. The Tribunal concluded that the appellant was not an intermediary, as the services were provided on a principal-to-principal basis. Conclusion: The Tribunal allowed the appeal, granting the appellant eligibility for the refund of unutilised credit, recognizing the services provided as export of services, and determining the Place of Provision of Service under Rule 3 of the Place of Provision of Service Rules, 2012. The Tribunal also concluded that the appellant did not act as an intermediary. The appeal was allowed with consequential relief as per law.
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