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TMI Blog2023 (4) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 2(f) of the POPS Rules, 2012 has been dealt with by the CBIC under the GST regime by Circular No. 159/15/2021-GST dated 20.09.2021 - though the said circular was issued under the GST regime but for the purpose of consideration of such phrase under the service tax regime, it should apply mutatis mutandis - the said circular has been issued on the basis of representations received, citing ambiguity caused in interpretation of the term Intermediary services , and after examination of the difficulties faced by the trade and industry, the said circular was issued, with a view to ensure uniformity in the implementation of the provision of the law across field formations. In an identical case, this Tribunal in the case of M/S. BLACK ROCK SERVICES INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CGST, COMMISSIONER OF CENTRAL EXCISE SERVICE TAX GURGAON, HARYANA [ 2022 (8) TMI 874 - CESTAT CHANDIGARH ] has defined the true meaning and purpose of the phrase intermediary holding that the appellant therein cannot be considered as an intermediary and accordingly, allowed the benefit of refund provided under Rule 5 ibid. - Rather, the contract referred in the case is the sub-contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d adjudication order, the learned Commissioner (Appeals), CGST Central Excise, Mumbai vide impugned order dated 31.08.2018 has upheld the original order and rejected the appeal filed by the appellant. In support of rejection of appeal, the learned Commissioner (Appeals) has held that the appellant performs the role of intermediary for the overseas service receiver and since the location of the appellant is in India, the disputed service cannot be termed as exports and should appropriately fall under Rule 9(c) of Place of Provision of Services (POPS) Rules, 2012. Feeling aggrieved with the impugned order, the appellant has filed this appeal before the Tribunal. 2. Learned Advocate appearing for the appellant submitted that the agreements entered into between the overseas entities and the appellant clearly provide that the appellant is not an agent acting on behalf of the overseas entities and thus, the conditions of Rule 6A (1) of the Service Tax Rules, 1994 have been duly satisfied, in order to claim that the transaction made between both the sides should be construed as export and the benefit of export of service should be available to the appellant. To strengthen such stand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... require by IMSIPL to perform the necessary services to IMS NY. c) The terms for performing services will be mutually agreed between IMS NY IMSIPL. d) Maintain necessary approvals, permits, registrations and licenses as are necessary for the purpose of complying with applicable law during the term of this Agreement. 8. CHARGES AND PAYMENT 8.1 IMSIPL shall raise monthly invoice on IMS NY for the services mentioned in Clause 4 above alongwith applicable taxes. The service fees payable by IMS NY to IMSIPL would be determined by adding mark-up of 15 percent on the costs incurred by IMSIPL in providing such services. Costs for the purposes of applying the markup include all direct and indirect expenses incurred by IMSIPL in connection with performance of the services sub-contracted by IMS NY, including, but not limited to personnel costs, travel expenses, rent, foreign exchange fluctuation gain/loss resulting due to this transaction and other administrative and overhead expenses. Such cost will exclude any interest expense and income tax liability of IMSIPL. Further, no markup will be applicable to any cost recharge in the nature of reimbursement or recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who provides the main service or supplies the goods on his account; 2.3 From the perusal of the definition of intermediary under IGST Act as well as under Service Tax law, it is evident that there is broadly no change in the scope of intermediary services in the GST regime vis-a-vis the Service Tax regime, except addition of supply of securities in the definition of intermediary in the GST Law. 3.5 Sub-contracting for a service is not an intermediary service: An important exclusion from intermediary is sub-contracting. The supplier of main service may decide to outsource the supply of the main service, either fully or partly, to one or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the main supply between the principal supplier and his customers, and therefore, clearly is not an intermediary. For instance, A and B have entered into a contract as per which A needs to provide a service of, say Annual Maintenance of tools and machinery to B . A subcontracts a part or whole of it to C . Accordingly, C provides the service of annual maintenance to A as part of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ambit of intermediary . Sub-contracting for a service is also not an intermediary service. The supplier of main service may decide to outsource the supply of main service, either fully or partly, to one or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof and does not merely arrange or facilitate the main supply between the principal supplier and his customers and therefore clearly not an intermediary. Who is an 'intermediary' and what is 'intermediary service' has been clarified by Central Board of Indirect Taxes and Customs (C.B.I. C.) vide Guidance Note dated 20-6-2012 and under GST regime also a clarification has been issued by C.B.I. C. on 20-9-2021 both of which are in line with the discussions made hereinabove about 'intermediary'. 8. Rather, the contract referred in the above case is the sub-contracting agreement for the services being provided by the appellant to overseas entity as the main contractor and thus, under no stretch of imagination, it can be held that the appellant is an agent or intermediary, engaged for facilitating business of overseas entity. 9. In view of forgoing di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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