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2024 (7) TMI 618 - AT - Service TaxDenial of refund of unutilised accumulated CENVAT Credit - denial on the ground that the services were not exported as place of provision of service was in India in view of provision contained in Rule, 9(c) Place of Provision of Service Rules, 2012 (POPS) - HELD THAT - In the instant case going by para 5 of the agreement copy, agent commission on all sale of products was only payable to the Appellant for providing services (promotional and other sale services) by the principle namely CPC Global but in carrying forward the same observations made in the previous order the subsequent order was passed with reference to those two paragraphs noted in Lubrizol Advanced Materials India Pvt. Ltd. and R.S. Granite Machine Tools Pvt. Ltd. respectively by holding that consideration received by the Appellant from M/s CPC Global as a service provider was not directly linked with the sale of products by the selling company in India. Further both are treated as independent entities only in view of general Clause prescribed under 10.1 that explicitly puts the Appellant in the nature of independent contractor agent and not an salary paid agent of CPC Global. This being the facts on record, the decisions of Co-ordinate Bench of this Tribunal is disagreed upon and the matter referred to the Larger Bench, had appeal against one of such orders not travelled up to the Hon'ble Supreme Court and resulted in denial of admission of the appeal filed by the Respondent-Department against the said order. Appeal allowed.
Issues: Denial of refund of unutilised accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.06.2012 due to services not being exported as the place of provision of service was in India, based on Rule 9(c) Place of Provision of Service Rules, 2012 (POPS). Confirmation of denial of refund by Commissioner (Appeals) challenged in the appeal.
Analysis: 1. The case involved the denial of refund of unutilised accumulated CENVAT Credit amounting to ?88,29,142 for the period from October 2015 to June 2017. The denial was based on the contention that the services provided were not exported as the place of provision of service was deemed to be in India according to Rule 9(c) of the Place of Provision of Service Rules, 2012 (POPS). The Assessee-Appellant challenged the confirmation of denial of refund by the Commissioner (Appeals) in the present appeal. 2. The Appellant, registered with the Service Tax Department for providing "Business Auxiliary Services," was engaged in providing sale-promotion and sale-support services to its associated company in Dubai. The denial of refund was due to the categorization of services as "intermediary" services under Rule 2(f) of the POPS Rules, 2012, leading to periodic denials of refund since July 2012. The appeal focused on the period from October 2015 to June 2017, which was confirmed in the Order-in-Appeal dated 11.10.2018. The Appellant contended that the agreement with the associated company established it as an independent contractor, excluding it from the intermediary classification. 3. During the appeal hearing, the Appellant's Counsel cited previous orders by the Tribunal and the Hon'ble Apex Court affirming the independent contractor status of the Appellant. The agreement's Clause 10.1 emphasized the principal-to-principal nature of the services, further supporting the Appellant's position. The Counsel argued that the consideration received by the Appellant was not indicative of a principal-agency relationship, challenging the Commissioner (Appeals) order on legal and factual grounds. 4. The Authorised Representative for the Respondent-Department supported the Commissioner (Appeals) order, highlighting the rationale behind the denial of refund. Despite the Tribunal's previous order in the Appellant's case, the appeal against it was not admitted for hearing by the Hon'ble Supreme Court of India. 5. Upon reviewing the case record, agreement copy, relevant provisions of POPS Rules, 2012, and CENVAT Credit Rules, 2004, the Tribunal noted the evolution of the definition of "intermediary" post-2014. The Tribunal referenced previous judgments to analyze the nature of services provided by the Appellant in comparison to other cases. The agreement's terms, especially Clause 5 regarding commissions, were crucial in determining the relationship between the parties. The Tribunal concluded that the Appellant operated as an independent contractor agent, not as a salaried agent of the associated company, leading to the allowance of the appeal and setting aside the Commissioner (Appeals) order. 6. The Tribunal's decision was influenced by the legal framework post-2016, which defined "services" as distinct from goods, impacting the taxation dynamics. Considering the Supreme Court's decision subsuming the Tribunal's order, the appeal was allowed, and the Commissioner's order was set aside, emphasizing the independent contractor nature of the Appellant's services.
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