9911796707
TMI Blog2016 (5) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant is providing main service i.e. “business support services” to WWD US and on his own account. Therefore, applicant is not an “intermediary” and the service provided by him is not intermediary service. Thus, the place of provision of service would be location of recipient of service i.e. WWD US under Rule 3 of POPS. Therefore, the place of provision of payment processing service by the applicant, is outside India in terms of Rule 3 of Place of Provision of Services Rules, 2012. Whether the services to be provided by the Applicant to WWD US that 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 - Held that:- the place of provision of service would be outside India. It is observed that in this case, provider of service i.e. the applicant, is located in India, which is the taxable territory; recipient i.e. WWD US is located in USA; the service to be provided by the applicant i.e. business support serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, who would provide necessary payment collection gateway facility to the customers, who may wish to effect payment in INR by using their Indian credit cards. Towards this, the applicant proposes to open a separate bank account in India wherein the payment collection gateway company appointed by the applicant will deposit the money so collected from the customers of WWD US. Further, it is also contemplated that the applicant may allow the customers to directly deposit money in its bank account using their net banking facility. Thereafter, all such collections will be transmitted by the applicant to WWD US on actual basis i.e. without any mark-up. In consideration for the above-mentioned services, the applicant shall charge a fee equal to the operating costs incurred by the applicant plus a mark-up of 13% on such costs. It is proposed that the applicant would receive such fee from WWD US for services provided by it in US Dollars. Applicant submits that WWD US would be the only customer of the applicant. The applicant would not provide any services for or on behalf of WWD US in India or outside India. The applicant is not authorized to enter into any contract or arrangement on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional space, synchronization etc.) are also available to the users for a service fee, which varies based on the service level requested by the users. WWD US also provides Secure Sockets Layer ( SSL ) certification services, which ensures that the message to be sent is properly encrypted and reaches the intended recipient. 3. In light of the aforesaid submissions on facts, the applicant seeks to obtain a ruling with regard to the following questions of law; Question No.1: Whether, in the facts and circumstances of the case, the place of provision of payment processing service by the applicant, is outside India in terms of Rule 3 of Place of Provision of Services Rules, 2012 (hereinafter referred to as POPS)? 4. Applicant inter-alia submits that they propose to provide the payment processing services to WWD US; that such services would enable the customers of WWD US in India to have a payment solution in respect of the services which such customers procure from WWD US; that the service of payment processing proposed to be provided by the applicant to WWD US would be the main service of the applicant and would be provided by the applicant on its own account; that ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provider:- (a) Services provided by a banking company, or a financial institution , or a nonbanking financial company, to account holders; (b) Online information and database access or retrieval services; (c) Intermediary services; (d) Service consisting of hiring of all means of transport other than,_ (i) Aircrafts, and (ii) Vessels except yachts, Up-to a period of one month Rule 2 Definitions In these rules, unless the context otherwise requires,- (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. 7. It is observed that WWD US is engaged in the business of providing domain name registration, web hosting, designing services etc to the customers in India. For such services, customers would make payment to WWD US. Further, the customers in India shall be making payment to WWD US for these services i.e., domain name registration, transfer ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 1 above, the services to be provided by the Applicant to WWD US that 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? 9. Applicant submits that in terms of Rule 6A of Service Tax Rules, 1994, service provided by the applicant to WWD US i.e. processing of payment, will qualify as export of taxable services. Rule 6 A (1) of Service Tax Rules, 1994 read as under: RULE 6A Export of services.- (1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- (a) the provider of service is located in the taxable territory, (b) the recipient of service is located outside India, the service is not a service specified in the Section 66 D of the Act, (c) the place of provision of the service is outside India, (d) the payment for such service has been received by the provider of service in convertible foreign exchange, and (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant in any manner. Applicant also relied upon Service Tax: An Education Guide dated 20th June, 2012 issued by Ministry of Finance, Department of Revenue, Tax Research Unit ( TRU ), wherein a service receiver is defined as under: Normally, the person who is legally entitled to receive a Service and therefore, obliged to make payment, is the Receiver of a service, whether or not he actually makes the payment or someone else makes the payment on his behalf. 12. It observed that payment processing services are proposed to be provided by the applicant to WWD US on principal to principal basis. It is the main service i.e. business support services . Further, applicant is not concerned in respect of services provided by WWD 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 WWD US, a fee equal to the operating cost incurred by the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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