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TMI Blog2017 (11) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... ebook. The Respondent and the subscribers are not into contractual agreement. There is no consideration flowing to the Respondent from such subscribers. The Respondent is working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs - The Tribunal in the case of M/s Paul Merchants Ltd. [2012 (12) TMI 424 - CESTAT, DELHI (LB)] has held that Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 have been framed, following general principle that taxable service provided by a person in India will be subject to tax only when it has been consumed in India, and Service Tax must be levied in that taxable area where service has been consumed. Coming to the Rule 3 of the Place of Provision of Service Rules, 2012 and its application to the instant case, we find that the proviso to said Rule states that in case location of the service provider is not available in the ordinary course of business, the place of the provision shall be the location of the provider of Service. Further as per Rule 2 (i) of the said Rules the Location of Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Dec 14 were rejected on the ground that the services of BSS provided by the Respondent to M/s Facebook does not qualify as export of service. The Respondent filed appeals against the rejection of the claim whereas the revenue filed appeals against sanctioning of claims. The Appellate Commissioner allowed the appeals filed by the Respondent whereas the appeals of the revenue were rejected. 3. Hence all the present appeals by Revenue. 4. The Revenue has filed appeal on following grounds : 4.1 The Respondent provide SMS Aggregator services to Facebook within India. The SMS Messages are sent to subscribers of facebook as directed by Facebook. The assessee provided the services in India on behalf of Facebook. Service is provided and consumed in India. Both the actual service provider and recipients of services are located in India. Facebook hired the assessee to provide services in India to the subscribers in India. 4.2 It is a case of both the service provider and service recipient are located in india and accordingly as per Rule 3 of Place of Provision of services Rules(POP), the place of provision of service is the location of service recipient of service. Proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roo network and an operator's SMS-C to subscriber and also transmit MO or SMS messge originated by a subscriber to Facebook via and operator's SMS-C and the Webaroo network. All deliverables are property of facebook. All users, usage and other data generated or collected in the course of providing the service shall be owned by Facebook. They perform service on behalf of facebook in the capacity of independent contractor. They are raising monthly bill to Facebook based on delivery report without indicating the service tax and the payment is received in Foreign convertible currency from Facebook towards these services. They are working as an aggregator/ facilitator of all SMS's either originating from Facebook or subscribers of facebook to transmit between them as per specific discretions of facebook. They cannot charge any fee to the subscriber or send any message to any subscriber other than the SMS message as directed by Facebook. Thus they are simply acting as an aggregator providing SMS Aggregator services to Facebook i.e Application Programming Interface (API) connected with Facebook server which are located in USA Ireland. The Facebook initiates the transmission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eivers of SMSs. The subscribers of Facebook are not concerned with the activity of Respondent. 5.3 He submitted that the proviso to rule 3 of Place of Provision of Service Rules, 2012 does not apply to present case as it categorically states that where the location of the service recipient is not available in the ordinary course of business, the place of provision shall be the location of the recipient of service. In terms of definition of location of the service receiver provided in rule 2 (i) of POP Rules wherein it is stated that location of service provider is premises for which service tax registration has not been taken then the location of his business establishment. The business location of M/s Facebook is Ireland which is available, hence the ground of appeal is not correct. The ground of the Revenue is that the subscribers of Facebook are recipient of service and both the service provider and service recipient are located in taxable territory and hence provisions of Rule 8 of POP is applicable and therefore the services cannot be termed as export of services is also incorrect. The Service provider i.e the Respondent is located in India which is taxable territory and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Respondent's API connectivity and respondent provides the services to M/s Facebook by sending or receiving SMS to subscribers of Facebook located in India. The Respondent is thus working as aggregator/ facilitator of all SMSs either originating from Facebook or subscribers of Facebook to transmit between them as direction and discretion of facebook. The Facebook pays service charges to the Respondent for such services. In this whole process the Respondent neither interacts with the subscribers of the Facebook nor has any connection/ relation/ concern with the said subscribers. They are barred from any relation with the subscribers of Facebook. Under the terms of agreement we find that the Respondent is getting paid by the facebook based upon the number of SMS messages successfully transmitted through Respondent's network. It also provides the fees based upon the Billable Message Length , Unicode Message, Undelivered Message which would not be chargeable, Long Codes fees etc. It provides the fee structure based upon nature of message. In sum and substance the Respondent is rendering services to M/s Facebook and getting fees for services provided in each month. 7.1 We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement to provide service, which may be oral or written. The importer and exporter does not even know who the service provider is, as they are not aware of the identity of the foreign banks which would be providing services. Exporter or importer in India does not have any formal or informal agreement with the foreign bank. Importer or exporter in India does not even know the quantum of charges which the foreign bank would be recovering. Therefore, in view of the above mentioned factual position and also in view of the various articles of URC 522/UCP 600, it is clear that services provided by the foreign bank to the bank in India. Going by the same analogy we find that the above facts are also applicable to the present transactions as the subscribers are not even aware of the existence of the Respondent and their role in services provided by Facebook. The Respondent and the subscribers are not into contractual agreement. There is no consideration flowing to the Respondent from such subscribers. The Respondent is working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs. The Tribunal in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foreign exchange HELD : No contract/agreement between assessee and subscriber of foreign telecom operator Therefore foreign telecom service provider paying for services as recipient of service Telecom services falling under category III Export of Services Rules, 2005 Transaction constituting export since services rendered to foreign services provider located abroad Board Circular clarifying benefit accruing to foreign service provider as subscriber billed for services rendered Ratio of Tribunal's decision in Paul Merchants [2013 (29) S.T.R. 257 (Tribunal)] squarely applicable Subscriber of foreign telecom service provider not recipient of service Rule 3(1)(iii) of Export of Service Rules, 2005. 7.3 The various benches of Tribunal has adopted the same view in case of S IMPRA AGENCIES Vs. CCE, DELHI - 2014 (36) STR 430 (TRI DEL); GAP INTENRANTIONAL SOURCING (INDIA) PVT. LTD Vs. COMM. OF ST, DELHI - 2015 (37) STR 757 (TRI DEL) and INTERNATIONAL OVERSEAS SERVCIES COMMR. OF ST, MUMBAI-I - 2016 (41) STR 230 (TRI). 7.4 Coming to the Rule 3 of the Place of Provision of Service Rules, 2012 and its application to the instant case, we find that the proviso to said Rule sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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