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2024 (12) TMI 1455 - AT - Service TaxCash refund of accumulated cenvat credit on input services used in providing output service - export of services - appellant is an intermediary or not - refund claims rejected solely on the ground that the services rendered by the appellant to Microsoft Corp, USA is not an Export of Service , which are in the nature of intermediary service - HELD THAT - The appellants had entered into an agreement with Microsoft Corp. for providing various services viz., online technical support service to the customers of Microsoft Corp. through mail, over phone, etc. In other words, they rendered services in the nature of after sales support or product warranty support services by an agreement with MS Corp. Thus, there is an agreement between the appellant and MS Corp and nowhere, they are connected with the customers of the Microsoft Corp in rendering such services. This issue has been considered by this Tribunal more or less in a similar circumstances in the case of CCT vs. M/s. Informatica Business Solutions Pvt. Ltd. 2024 (11) TMI 922 - CESTAT BANGALORE , where it was held that ' The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. There is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply.'. The refund cannot be denied - the impugned order is set aside - appeal allowed.
Issues Involved:
1. Entitlement to cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 for services rendered to Microsoft Corp., USA, and Microsoft Mobile, Finland. 2. Classification of services provided by the appellant as 'Export of Services' or 'Intermediary Services' under the Service Tax Rules, 1994. Issue-wise Detailed Analysis: 1. Entitlement to Cash Refund of Accumulated Cenvat Credit: The appellants, engaged in providing 'Information Technology Software Services' and 'Business Auxiliary Services', sought cash refunds for accumulated Cenvat credit on input services used in providing output services exported under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No.05/2006-CE NT dated 14.03.2006. The refund claims amounting to Rs.3,42,97,703 for the period October 2015 to December 2015 and Rs.13,46,28,475 for the period April 2011 to September 2013 were rejected by the adjudicating authority and subsequently by the Commissioner (Appeals). The primary contention was whether the services rendered to Microsoft Corp., USA, and Microsoft Mobile, Finland qualified as 'Export of Services', which would entitle the appellants to the refund. 2. Classification of Services as 'Export of Services' or 'Intermediary Services': The Revenue's rejection was based on the classification of the services as 'intermediary services', which would not qualify as 'Export of Services' under the Service Tax Rules, 1994. The appellants argued that their services were provided on a principal-to-principal basis to Microsoft Corp. and Microsoft Mobile, Finland, without any interaction with third-party customers or vendors. The appellants contended that they were not intermediaries as defined under Rule 2(f) of the Place of Provision of Services Rules (POPS), 2012, supported by CBIC Circular No.159/15/2021/GST dated 20.09.2021. The Tribunal referred to similar cases, including CCT vs. M/s. Informatica Business Solutions Pvt. Ltd., and reiterated that the services provided were not intermediary services but were on their own account, thus qualifying as 'Export of Services'. The Tribunal emphasized that the basic requirement for a service to be classified as intermediary is the involvement of at least three parties, where the intermediary arranges or facilitates the supply of goods or services between two or more persons. In this case, the services were directly provided to Microsoft entities, and the appellants did not act as intermediaries. The Tribunal cited multiple precedents and circulars clarifying the definition and scope of intermediary services, ultimately concluding that the services provided by the appellants did not meet the criteria for intermediary services. Conclusion: The Tribunal found merit in the appellants' arguments, setting aside the impugned orders and allowing the appeals with consequential relief. The Tribunal concluded that the services provided by the appellants to Microsoft Corp., USA, and Microsoft Mobile, Finland were indeed 'Export of Services', entitling them to the cash refund of accumulated Cenvat credit as per the applicable rules and regulations. The Revenue's appeal was rejected, and the Tribunal affirmed the appellants' entitlement to the refund.
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