9911796707
TMI Blog2024 (5) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chapter V of the Finance Act, 1994 extends to the whole of India except the State of Jammu and Kashmir, it transpires as a corollary that services provided outside India are not liable for payment of service tax - the activities undertaken by the appellants in provision of ship crew management/ship management service to ESM Pte., Singapore as explained above does not get covered under the tax net of service tax. The appellants had entered into a Services Agreement dated 01.04.2013 with ESM Pte. Singapore for providing certain agreed services, as detailed in Appendix-I of this agreement. This contract covered the period from 01.04.2013 to 31.03.2016. Further, contract dated 01.04.2016 entered between the appellants and ESM Pte. Singapore, was of similarly worded but covered the period from 01.04.2016. For providing such services, the appellants are being paid an amount equal to applicable costs i.e., direct and indirect operating expenses of the appellants incurred in connection with providing the services, plus 8.70% (upto 31.03.2016) and 6.50% (from 01.04.2016) along with applicable taxes, if any. From plain reading of the legal provisions relating to Place of Provision of Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PING (INDIA) P. LTD. VERSUS COMMR. OF CGST, MUMBAI EAST [ 2019 (10) TMI 1324 - CESTAT MUMBAI] has held that appellant, a duly licensed Seafarer Recruitment service provider, as per agreement is not an intermediary particularly when entire process of selection, medical test, insurance, transportation etc. are carried out by him, for which he received payment in convertible foreign exchange from first party having its office in Singapore. It was held that services provided by him are to be considered as export of service. In the case of Ernst and Young Limited [ 2023 (3) TMI 1117 - DELHI HIGH COURT] , the Hon ble High Court of Delhi had examined the scope of the term intermediary and held that the services provided by the appellants cannot be considered as intermediary services and it would fall within the scope of the definition of export of service . In another case relating to supply of services to foreign vendors in the case of SNQS International Socks Private Limited (Trading Division) Vs. Commissioner of Central Excise and Service Tax [ 2023 (6) TMI 1084 - CESTAT CHENNAI] , the Tribunal has held that the services provided are in the nature of specified taxable services and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es provided bythe appellants to ESM is in the nature of 'intermediary services' as per Rule 2(f) of the place of Provision of Service Rules, 2012, the DGGI investigation concluded that as per Rule 9(C) ibid, the place of provision of services is the location of service provider, and thus the appellants are liable to pay service tax on the above transactions. Accordingly, on the entire fees received by the appellants during 01.10.2014 to 30.06.2017, service tax liability was worked out by initiating show cause proceedings by issue of show cause notice dated 16.06.2020 for demand of service tax short paid during 01.10.2014 to 30.06.2017 along with interest by invoking extended period under proviso to Section 73(1) of the Finance Act, 1994 and for imposition of penalties under Sections 77, 78 ibid on the appellants. In adjudication of the above SCN, learned Commissioner, Central Tax (CGST)& Central Excise, Navi Mumbai vide impugned order dated 23.07.2021 had confirmed the adjudged demands besides imposition of penalty under Sections 77 and 78 ibid. The appellants having been aggrieved by the impugned order passed by the learned Commissioner, have filed this appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India) Pvt. Ltd. Vs. Commissioner of CGST, Mumbai East - 2020 (37)G.S.T.L.182 (Tri. Mum.) (ii) Torm Shipping India Pvt. Limited Vs. Commissioner of CGST, Mumbai East - 2021 (44) G.S.T.L. 195 (Tri. Mum.) (iii) Anglo Eastern Maritime Services Pvt. Ltd. Vs. Commissioner of CGST, Mumbai East - MANU/CM/0129/2022 (iv) Ernst and Young Limited Vs. Additional Commissioner, CGST Appeals-II, Delhi and Anr. - 2023 (3) TMI 1117 (Delhi High Court) 4.1. Learned Authorised Representative for Revenue submits that the services of ship crew recruitment are being provided by the appellants to ESM Pte. who in turn provide such services to various ship/vessel owners, through ESS Pte., Singapore. Thus, learned Commissioner has come to conclusion that the appellants are acting as 'intermediary' between ESM and vessel/ship owners in the impugned order. By reiterating the findings made by the learned Commissioner, he stated that the appellants are covered under scope of Section 2(f) read with Rule 9(c) of POPS and therefore the confirmation of adjudged demands is sustainable and the appeal filed by the appellants are liable to be rejected. 5. The submissions advanced by the learned Advocate appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilitating crew recruitment services of ESM Pte. to the clients of ESM Pte./vessels managed by ESM Pte., but they could not alter the nature of the value of the main services provided to the clients of ESM Pte./vessels managed by ESM Pte., I find that the services rendered to the vessels/clients of ESM Pte., were not at noticee's risk and reward. Accordingly, in view of the factual position discussed above, I find that the main services i.e., crew recruitment services provided by ESM Pte. to their clients/vessels managed by them, were not provided on noticee's own account. Thus, in view of the discussion above, I find that both the criteria to be an intermediary, as discussed above in terms of the rule 3 of the place of provision of service rules, 2012 and fulfilled in the present case. Learned Commissioner, in justifying that why he did not follow the orders of the Tribunal in the cases of Seaspan Management India Private Limited (supra) had given his findings as below: 4.3.10...Whereas, in the present case, as discussed above in the foregoing paras, it has been clearly found that the noticee were facilitating the provision of crew recruitment/manning services provided by ESM P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-- (a) an activity which constitutes merely,-- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1.-- For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,-- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, payable by him, which shall be equal to the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded:…." PLACE OF PROVISION OF SERVICES RULES, 2012 "Definitions. 2. 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; Place of provision generally. 3 . The place of provision of a service shall be the location of the recipient of service: Provided that in case of services other than online information and database access or retrieval services, where the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service. Place of provision of services where provider and recipient are located in taxable territory. 8. Place of provision of a service, where the location of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a particular activity as a 'service' and to charge service tax thereon, it should be covered under the specific category of taxable services as per defined scope of coverage under tax net, inasmuch as each of the taxable services are defined separately under clause (105) of Section 65 of the Finance Act, 1994. The definition of taxable services under the category of 'Ship Management Service' defined under Section 65(96a) ibid included various activities including engagement or providing of ship crew. Further, such ship management service was covered specifically under the taxable clause (zzzt) of Section 65(105) ibid. Thus, it clearly flows from the above legal provision that the service of ship crew recruitment provided by the appellants to any person in the taxable territory are subjected to levy of service tax. Inasmuch as the Chapter V of the Finance Act, 1994 extends to the whole of India except the State of Jammu and Kashmir, it transpires as a corollary that services provided outside India are not liable for payment of service tax. In view of the above, we are of the prima facie view that the activities undertaken by the appellants in provision of ship crew management/ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract entered between them and the documents on record evidence in the nature of transactions in providing service amongst them. 10.2 On perusal of the records of the case, it transpires the appellants had entered into a 'Services Agreement 'dated 01.04.2013 with ESM Pte. Singapore for providing certain agreed services, as detailed in Appendix-I of this agreement. This contract covered the period from 01.04.2013 to 31.03.2016. Further, contract dated 01.04.2016 entered between the appellants and ESM Pte. Singapore, was of similarly worded but covered the period from 01.04.2016. For providing such services, the appellants are being paid an amount equal to 'applicable costs' i.e., direct and indirect operating expenses of the appellants incurred in connection with providing the services, plus 8.70% (upto 31.03.2016) and 6.50% (from 01.04.2016) along with applicable taxes, if any. The above agreement contains various clauses which inter-alia include scope of work, duties of the appellants as service provider, duties of service receiver, period of agreement, fees and payment for services provided, reimbursement of expenses, use of software, confidentiality clause, legal rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd/or clients of ESM Pte. or any agent or manager or the Vessels by any Recruit hired under this Agreement. 13. To provide ESM Pte., if requested, with information about conditions of payment, rates of pay, personal data of the Recruits, deductions and/or contribution that may be payable and other such information as may be reasonably required by ESM Pte. 14. To be responsible to maintain full personnel files of all seafarers employed, in accordance with STCW Code requirements and have details made available to ESM Pte. as and when required.". 10.3 In order to understand any contract or agreement, all the clauses and the entire agreement has to be examined comprehensively so as to bring out the true nature and purpose of such agreement/contract. In the international Maritime trade, provision of services with regard to ship crew management and ship management etc. is governed as per standard contract of Baltic and International Maritime Council (BIMCO). The BIMCO agreement provides for various management services such as technical management, commercial management, crew management and crew insurance etc., for which the parties to contract have to enter into agreement. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal management, and thus in the 'services agreement/contract' various terms and conditions have been entered into contractual arrangement. However, learned Commissioner, based on certain clauses of the agreement, had come to the conclusion that the requirement of providing information to the service receiver ESM Pte., Singapore and to any other persons such as ESS Pte., Singapore or ship/vessel owners, for compliance with various legal requirements, as though it is a part of service. It is also a fact seen from the records that such SHIPMAN contracts have been entered by ESS Pte., Singapore with vessel/ship owners and the appellants do not have any role to do in such contracts or provision of services amongst them. From the detailed analysis of the various terms of the 'services agreement' and the international conventions/treaties, we are of the considered view that these terms and clauses do not alter the nature of services that has been provided by the appellants being 'ship crew management services' provided to ESM Pte., Singapore. Further, mentioning of the other parties for compliance with regulatory requirement in the contract, does not in any way change the services being p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above legal provisions, in the present case, we find that since the services are provided in recruitment of ship crew and enabling them for the ocean voyage to be performed as per the directions of the service receiver ESM Pte., Singapore, which is situated out of 'taxable territory', the services provided by the appellant cannot be covered under the service tax netin terms of Section 66B ibid. 11.2 In this case, the appellants are found to be providing services of ship crew recruitment essentially for its foreign entity, who in turn were providing ship crew management and other related services to ESS Pte., Singapore and other Vessel/Ship owners. The appellants have not engaged any other service provider for the process of procuring the services to be exported as per the requirement of his foreign entity ESM Pte., Singapore. All these services are rendered only to ESM Pte., Singapore on their own account and they are receiving the consideration for the services provided as a percentage of agreed costs of the services exported. There is no evidence on record to show that the appellants are receiving any consideration from the Ship/Vessel owners or any other person and as such, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d view that the activities of the appellants will be coming under ship crew management services, which was covered under pre-negative list regime by the definition of ship management services under Section 65(96a) ibid and during the disputed period, i.e., post negative list regime as a taxable service under Section 65B(44) ibid and also would not be falling under intermediary services, the place of provision of the services applicable to the appellants, is the location of the service recipient, in terms of Rule 3 of the Place of Provision of Services Rules, 2012. Further, Rule 9 ibid is not applicable to the appellants, as the services rendered by him are in relation to supply of services to the foreign client on his own account. The appellants cannot not be said to be acting as an intermediary i.e., the services were performed by the appellants on a principal-to-principal basis and at arm's length basis. Inasmuch as all the conditions prescribed under Rule 6A of the Service Tax Rules, 1994 are satisfied, the services of the appellants are to be treated as export of services. Thus, we are of the considered view that the findings given by the learned Commissioner in the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-àvis the Service Tax regime, except addition of supply of securities in the definition of intermediary in the GST Law. 3. Primary Requirements for intermediary services The concept of intermediary services, as defined above, requires some basic pre-requisites, which are discussed below: 3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity between only two parties can, therefore, NOT be considered as an intermediary service. An intermediary essentially "arranges or facilitates" another supply (the "main supply") between two or more other persons and, does not hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide to outsource the supply of the main service, either fully or partly, to one or more subcontractors. 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 such sub-contract, by providing annual maintenance of tools and machinery to the customer of 'A', i.e. to 'B' on behalf of 'A'. Though 'C' is dealing with the customer of 'A', but 'C' is providing main supply of Annual Maintenance Service to 'A' on his own account, i.e. on principal to principal basis. In this case, 'A' is providing supply of Annual Maintenance Service to 'B', whereas 'C' is supplying the same service to 'A' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the issue with respect to invocation of extended period in respect of fraud, collusion, willful misstatement or suppression of facts under tax demands is no more open to dispute, as the Hon'ble Supreme Court in the case of Uniworth Textiles Ltd., Vs. Commissioner of Central Excise, Raipur - 2013 (288) E.L.T. 161 (S.C.) had held that the onus is on the Revenue to prove the presence of such specific grounds. The relevant paragraph of the above judgements is extracted below: "24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the showcause notice which is the allegation against the assessee falling within the four corners of the said proviso....' (Emphasis supplied) 26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a wilful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant." 13.2 On the basis of above judgement of the Hon'ble Supreme Court and on the facts of the case, we find that there are no specific grounds invoked for suppression of facts or willful mis-statement on the part of the appellants, parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atriation), visa and travel arrangement including boarding and lodging through approved travel agents for the crew as and when the same may be required. 9. Performing such other functions relating to crew recruitment services as may be required from time to time. 6. There is no stipulation either under Article 2 or under any clauses of the agreement, whereby it could be inferred that the finding of the Ld. Commissioner (Appeals) at para 6 of the impugned order that they were supplying man power on behalf of their overseas client is factually incorrect and not supported by any evidence. This is the only reasoning advanced by the Ld. Commissioner (Appeals) in setting aside the refund order where under the original authority after verification of all other conditions prescribed under the said notification 27/2012 CE(NT) dated 19/06/2012 issued under Rule 5 of the Cenvat Credit Rules, 2004 sanctioned the refund. In the subsequent order, however, the adjudicating authority considering the appellant as an intermediary, rejected the refund claim. The allegation of the department as observed above that the appellant is an 'intermediary' is without any basis, hence, cannot be sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (1)(d) that the Place of Provision of Service is to be outside India to bring the activities into the purview of Export but Rule 9 of the Place of Provision of Services Rules, 2012 stipulates under sub-clause (c) that in case of intermediary service, the location of service provider since been in India, such service rendered by agent to the principal cannot be treated as export of services for which refund was not admissible. However, going by the Seafarer recruitment agreement executed between the parties concerning status/standing/capacity of the parties at page 1 under sub-clause (c), it has been described as below. "The employer desires to employ seafarers or crew on behalf of its principals and for vessels owned by the principals through the Agent and desires to enter into this Agreement". The above sentence makes it abundantly clear that first party to the agreement i.e. employer is an intermediary between the principal (third party but not a signatory to the agreement) and the appellant who is, as per sub-clause (a) is in the business of Seafarer recruitment service duly licensed to provide Seafarer recruitment service to third party. This being the status of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant (described as 'Ship Manager') and the overseas associate company TORM Bermuda (called as 'Primary Manager'), various services were agreed to be provided by the appellant to their overseas associate company. The services mentioned in the said agreement are broadly relate to Technical and Operation Services, Agency Services, SQE Services, Vetting Services, Crew Management Services etc.. The scope of each said services are narrated under various clauses of the agreement which as whole described as Ship Management service. Interpreting one of the said services particularly 'Agency Services', the Learned Commissioner (Appeals) has concluded that the relation between the appellant service provider and the overseas service recipient are not on principal to principal basis but as a principal and agent which falls within the scope of 'intermediary' as defined under Rule 2(f) of POPS Rules, 2012, hence not an export service. In his finding, the Learned Commissioner (Appeals) had observed that the appellants, as per the agreements, are required to appoint agent on behalf of their principal, hence covered under the definition of intermediary. It is the observation that in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate inasmuch as the appellants are providing ship management services, which is the main service, on their own behalf to their overseas client, which includes varieties of services including appointment of agent, recruitment of crew under the Crew Management Service and they had never acted as facilitator between the overseas associate company as service recipient and the agents or crew appointed for smooth functioning of the vessel, which is the main service agreed to be provided by the appellant. In other words, the service of appointing Crew or Agent had been provided on their account, hence, falls under the exclusion clause of the definition of 'intermediary'. 11. This issue has been considered by the Tribunal in the case of Seaspan Crew Management India Pvt. Ltd. v. Commissioner of CGST vide Order Nos. A/86004-86007/2019, dated 16-5-2019 where M/s. Seaspan Crew Management Pvt. Ltd. were supplying the manpower to their overseas associate company Seaspan Canada. The allegation of the Department was that the services provided by Seaspan India to Seaspan Canada as an intermediary, hence the services rendered cannot qualify as export services, consequently, refund under Rule 5 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is immaterial if he is called a broker or an agent or in any other name. Agreement copy at Annexure-2 clearly reveals that Appellant selects and trains crew members as an independent agency and provides the trained personnel to its overseas client namely M/s. Anglo-Eastern Tanker Management (Hong Kong) Ltd. The said service recipient provides entire ship management service to ship owners and in the process it recruits the crew members selected and trained by the Appellant. In the process, Appellant gets 15% as its remuneration over and above the amount spent in completing the recruitment process, training and making provision for Visas and travels for the crew members. This being facts on record, it can be said that only trained manpower supply work is done by the Appellant and the service recipient recruits those manpower after taking them into its fold and control and even pays salary to them directly. Additionally Annexure-2 i.e. agreement copy clearly contains provision that it is an agreement on principal to principal basis and during subsistence of the agreement, it is the Appellant who shall indemnify overseas client against any claim or demand, cost, action that may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... picked up trained crew members from the Appellant selected at its instance and recruited them in its own company for providing crew management service to ship owners. 7. In para 8 of his order learned Commissioner (Appeals) also had made some observations concerning the Appellant after going through the Director General of Shipping Control Website. But I prefer not to go into its detail as the same relates to grant of licence to the Appellant from 05.11.2017, which is beyond the period of dispute required to be settled in this appeal. On the contrary, I fully concur with the stand taken by the Appellant that in view of the judgments referred in the preceding paragraph namely Eastern Pacific shipping India Pvt. Ltd. Vs. Commissioner of CGST, Mumbai East. 2020 (37) GSTL 182 (Tri. Mumbai) that had set the ratio on the issue that seafarer's recruitment service provider, who processes the entire selection, medical test, insurance, transportation, training etc. to the overseas client and received convertible foreign exchange, is not an intermediary…" 14.5 In the case of Ernst and Young Limited (supra), the Hon'ble High Court of Delhi had examined the scope of the term 'inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said main supply. An activity between only two parties can, therefore, NOT be considered as an intermediary service. An intermediary essentially "arranges or facilitates" another supply (the "main supply") between two or more other persons and, does not himself provide the main supply. 3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services: (1) Main supply, between the two principals, which can be a supply of services or securities: (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is supply of intermediary service and is clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. 3.3 Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of "intermediary" itself provides that intermediary service providers-means a broker, an agent or any other person, by whatever name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is located outside India; (iii) the place of supply of service is outside India. (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India]; and (v) the supplier of service and the recipient of service are not merely establishment of a distinct person in accordance with Explanation 1 in section 8;" 31. Section 13 of the IGST Act contains provisions for determining the place of services where the location of supplier or location of the recipient is outside India. Thus, the question whether the supply of service by the petitioner is outside India is required to be determined with reference to section 13 of the IGST Act. 32. In terms of section 13(2) of the IGST Act, the place of supply of services except the services specified in Sub-sections (3) to (13) is the location of the recipient of the services. In the present case, there is no dispute that the provisions of Sub-sections (3) to (13) except Sub-section (8) of Section 13 are not attracted. The relevant extract of section 13 of the IGST Act is set out below: "13. (1) The provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of supply of services has been held to be in India on the basis that the petitioner is providing intermediary services. As discussed above, the Services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the Services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the Services. Since the recipient of the Services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of 'export of services' as defined under section 2(6) of the IGST Act. 34. There is no dispute that the recipient of Services - that is EY Entities - are located outside India. Thus, indisputably, the Services provided by the petitioner would fall within the scope of the definition of the term 'export of service' under section 2(6) of the IGST Act." 14.6 In another case relating to supply of services to foreign vendors in the case of SNQS International Socks Private Limited (Trading Division) Vs. Commissioner of Central Excise and Service Tax, the Tribunal has held in the Final Order No. 40478/2023 dated 23.06.2023 in disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or purchase price. Generally, the amount charged by an agent from his principal is referred to as "commission". Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable. In accordance with the above guiding principles, services provided by the following person will qualify as 'intermediary services': - (i) Travel Agent (any mode of travel) (ii) Tour Operator (iii) Commission agent for a service [an agent for buying or selling of goods is excluded] (iv) Recovery Agent Even in other cases, wherever a provider of any service acts as an intermediary for another person, as identified by the guiding principles outlined above, this rule will apply. Normally, it is expected that the intermediary or agent would have documentary evidence authorizing him to act on behalf of the provider of the 'main service'." 12.1.2 However, it has to be noted that by the amendment of the definition of "intermediary" under Rule 2(f) of the Place of Provision of Services, 2012 vide Notification No. 14/2014-ST dated 11-7-2014, a commission agent i.e., a buying or selling agent for supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant to his principal i.e., the foreign client, that too on his account. There is no service provider and service recipient relationship between the appellant and the vendors who were developed by him as there is no consideration received from these and the supply of goods by these vendors is incidental to the service of the appellant. Reportedly, the appellant has not entered into any agreement with the vendors either on their own or on behalf of the overseas client. 12.3 In this case, the appellant is found to be providing services of design and product development essentially for its foreign client to keep track of updates in fashion trends in knitted goods, evaluation and development of vendors, including quality monitoring and logistics and operational assistance. The appellant has not engaged any other service provider for the process of procuring the specific goods to be exported as per the requirement of his foreign client. All these services are rendered only to M/s. Primark, Dublin, Ireland on his own account and he is receiving the consideration for the services as a percentage of FOB value of the merchandise exported. There is no evidence on record to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 1994 states that:- (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, (c) the service is not a service specified in the section 66D of the Act, (d) the place of provision of the service is outside India, (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification." 13.1.2 In the present case, there is no dispute that the provider of service is located in the taxable territory and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is. 13.3 As all the conditions prescribed under Rule 6A of the Service Tax Rules, 1994 are satisfied, the services of the appellant are to be treated as export of services." 14.7 Furthermore, we also find that the issue of service tax liability in respect of the activity of supply of services to foreign vendors having been decided that it amount to export of services, and no service tax is payable in the case of SNQS International Socks Private Limited(supra) was upheld by the Hon'ble Supreme Court in Civil Appeal Diary No.8343 of 2024 by dismissing the appeal filed by the department. The said order of the Hon'ble Apex Court is extracted below: 15. In view of the above analysis of the legal provisions and on the basis of the orders passed by the Tribunal, the judgement of the Hon'ble Delhi High Court, and the judgement of the Hon'ble Supreme Court, we find that the impugned order dated 23.07.2021 with regard to confirmation of adjudged service tax demands along with interest and penalties are not sustainable. 16. In the result, by setting aside the impugned order dated 23.07.2021, the appeal is allowed in favour of the appellants. (Order pronounced in open court on 14.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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