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TMI Blog2016 (3) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of a service shall be the location of the recipient of service. The place of provision of business support service provided by the applicant, is outside India in terms of Rule 3 of the Place of Provision of Service Rules, 2012. - the services to be provided by the applicant to GoDaddy US would fall to be classified under Rule 3 of the Place of Provision of Services Rules, 2012 qualify as export of taxable services in terms of Rule 6A of the Service Tax Rules, 1994 (inserted vide Notification No. 36/2012-S.T. dated 20.6.2012) and therefore remain non-taxable for purpose of payment of service tax under the Finance Act. Further, applicant is not concerned in respect of services provided by GoDaddy US to Indian Customers, which relates to domain name registration, transfer services, web hosting services, designing services etc., In case, applicant was providing service to Indian Customers, he would have received "consideration" from Indian Customers. Fact is that no remuneration/consideration is received by the applicant from Indian Customers. Applicant is to only receive from GoDaddy US, a fee equal to the operating cost incurred by the applicant plus mark up of 13% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (either in various social media or by way of dispatch of personal emails to GoDaddy US existing customers in India). The content of advertisement would be prepared by the marketing team of GoDaddy US itself. Also, such advertisement would be directly placed on social media by GoDaddy US. The necessary advice in this regard and said information would be provided from the applicant to GoDaddy US. ii. Branding Activities: Applicant shall assist GoDaddy US in developing its brand in India by arranging for advertisement activities of GoDaddy US. An independent (third party owned) advertisement agency in India would be appointed by GoDaddy US directly. Such agency would negotiate the price for purchase of time slots or space for display of advertisement in the electronic or print media and coordinate regarding timing for display of the advertisement with Indian advertisement companies. Towards this, the applicant would provide information, advice and support to the marketing team of GoDaddy US regarding various events taking place in India where advertisements can be broadcasted. Also, applicant would suggest to GoDaddy US regarding the locations/geographies in India where banners, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pects, GoDaddy US shall require the applicant to provide oversight of the quality of the services of the call centre. Applicant will have no role to play in selection or appointment of the call centre in India by GoDaddy US. Applicant shall provide oversight of the quality of services rendered by the call centre and prepare a report, if desired by GoDaddy US, regarding the nature of complaints received by the call centre from customers in India so that GoDaddy could better appreciate the technical issues and provide long term solutions to customers, c. Payment processing services: GoDaddy US will provide its services and products to customers in India through its website. To ensure maximum reach to the customer base in India and enable customers to procure the service without any difficulty in making payments, GoDaddy US desires to provide an online payment facility to its customers in India. Customers who possess an international credit card may make payment directly to GoDaddy US in US Dollars. Customers will also be able to obtain the services by using their Indian credit cards or bank payment facilities and make payments in Indian Rupees ('INR'). To enable customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er services: GoDaddy US registers and transfers both generic top level domains, including the prominent domains such as .com, .net, .org, and .info, as well as country code top level domains including, .us,.ca,.mx,.fr,.it,.de and.es. Any user desirous of obtaining any particular domain can access a website of GoDaddy US and place a request for the same. Upon availability, GoDaddy US registers the desired domain name for the customer in his name. The customer enters into a contract for registration of the domain in its own name directly with GoDaddy US and also pays for such services through the channels as provided by GoDaddy US. b. Website hosting and e-mail: GoDaddy US provides web hosting services which allow its users to develop their own websites/webpages by using the development tools and applications which are available online on GoDaddy's website. GoDaddy US hosts the website of its users on its servers/dedicated servers located outside India. Such websites are accessible from the servers by anyone on a 24x7 basis. GoDaddy US also offers to install and configure supporting applications for such websites on its servers. c. Designing services: GoDaddy US assists its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal objective of the applicant will be to advance the business of GoDaddy US in India and establish its brand presence in the territory of India; that towards this the applicant proposes to undertake marketing and other allied services such as oversight of customer care centers operated in India by a third party orarranging for payment processing services to facilitate easy and secure payments by the customers of GoDaddy US; that oversight of call centers by the applicant would contribute towards the quality of customer support services by GoDaddy US being received by its present as well as prospective customers in India; that this will go to strengthening the customer's trust in the brand 'GoDaddy'. Applicant further submits that the services proposed to be provided by the applicant would collectively work towards augmenting the business of GoDaddy US in India; that the sole objective of GoDaddy US to appoint the applicant in India is to obtain support in order to establish its brand and promote its services; that the various elements of services proposed to be provided by the applicant to GoDaddy US are all aimed towards providing better customer experience whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary course of business. Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are- - There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. - The elements are normally advertised as a package. - The different elements are not available separately. - The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected. 7. Applicant submits that, the services proposed to be provided by the applicant would be provided as a package and the payment for the entire package would be a consolidated/lump sum payment; that the nature of various services provided collectively is incidental or ancillary to provision of marketing and support services to the business of GoDaddy US; that it is apparent that the services proposed to be provided by the applicant satisfy the illustrative tests laid down by the Education Guide and accordingly such services would be naturally bundled in the ordinary course of business. 8. Revenue inter-alia submits that various services i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Up-to a period of one month 9. The contention of Revenue is that the services proposed to be provided by the applicant are intermediary services as mentioned under Rule 9 (c) of POPS. 'Intermediary' is defined under Rule 2 (f) of POPS as under; (f) intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account. Therefore, as per Section 66 F (2) of Finance Act, 1994, more specific descriptions shall be preferred over a more general description. According to Revenue, in view of sub section (3) ibid, service will not be taxed as bundled service, if the same is to be an intermediary service . 10. The definition of intermediary as envisaged under Rule 2 (f) of POPS does not include a person who provides the main service on his own account. In the present case, applicant is providing main service i.e. business support services to WWD US and on his own account. Therefore, applicant is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of business. This point has not been controverted by the Revenue. We agree with the submissions of the applicant that proposed services are a bundle of services, bundled in normal course of business and not intermediary service. 13. In view of above, we rule as under; In the facts and circumstances, the various support services proposed to be provided by the Applicant to GoDaddy US are a bundle of Services being naturally bundled in the ordinary course of business and accordingly is a single service, being business support service, in terms of Section 66F of the Finance Act? Question 2: If the answer to Question 1 is positive, whether, in the facts and circumstances of the case, the place of provision of business support service by the Applicant, is outside India in terms of Rule 3 of the Place of Provision of Service Rules,2012 (herein after referred to as POPS ). If the services provided by the Applicant are not considered as naturally bundled then in the facts and circumstances enumerated in Annexure I, which of the individual service shall qualify for classification under Rule 3 of the POPS as service provided by a service provider located in India to a serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in US and not in India. Further, the judgment in case of Microsoft Corporation (India) Pvt. Ltd relied upon by the Revenue is an interim order regarding pre-deposit of the amount ordered by the Tribunal. Further, Hon'ble High Court observed that both sides have arguable case. In the case before us, Rule 3 ibid is applicable as the recipient of service is GoDaddy US i.e., outside India. 15. In view of above, we rule as under; In the facts and circumstances of the case, the place of provision of business support service provided by the applicant, is outside India in terms of Rule 3 of the Place of Provision of Service Rules, 2012. Question No. 3: Whether in the facts and circumstances and in the light of the answers to questions 1 and 2 above, the services to be provided by the Applicant to GoDaddy US that fall to be classified under Rule 3 of the POPS qualify as export of taxable services in terms of Rule 6A of the STR (inserted vide Notification No. 36/2012-S.T. dated 20.06.2012 and therefore remain non-taxable for purpose of payment of service tax under the Finance Act? 16. Applicant submits that in terms of Rule 6A of Service Tax Rules, 1994, service provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he would be hired by GoDaddy US to provide business support services and other incidental or allied services to GoDaddy US only and not to the customers of GoDaddy US in India. Under no circumstance, the applicant will provide any support to the customers of GoDaddy US in India; that after sale support including usage of the product or trouble shooting services will be provided to the customers, not by the applicant but by third party Call Centers, who would be directly appointed by GoDaddy US; that applicant will have no role in providing after sale support services to the customers in India in any manner; that applicant will not be remunerated for its services by any customer in India; that the remuneration in respect of applicant's service will also be provided by GoDaddy US only; that from the customer's perspective, the payment collection support is provided to the customers by GoDaddy US only; that the customers will, for all purposes, deal directly with GoDaddy US and not with the applicant in any manner. 19. It observed that business support services are proposed to be provided by the applicant to GoDaddy US on principal to principal basis. It is the main serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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