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TMI Blog2024 (9) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... the relationship between the parties must be that of a principal-agency relationship. ii). the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. iii). the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an intermediary is to mediate between two parties i.e. the principal service provider (the 3rd party) and the beneficiary who receives the main service and expressly excludes any person who provides such main service on his own account. It is found that in the Appellant s own case for the same impugned services for the earlier period in M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE ST, CHANDIGARH [ 2018 (5) TMI 1417 - CESTAT CHANDIGARH] this Tribunal has allowed the appeal of the Appellant and has held that the services rendered/provided by the Appellant do not fall in the definition of Intermediary Services . The Tribunal has also held that the services rendered by the Appellant satisfy the conditions prescribed for the Export of Services and therefore, the Appellant are not liable to pay service tax on the services rendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71,034/- u/s 76 of the Finance Act, 1994. 2. Briefly stated facts of the present case are that the Appellant are registered with the Service Tax department and are engaged in providing Visa Consultancy Services to its clients who wishes to settle down in the foreign countries. Inquiries were initiated against the Appellant by the department with respect to the various services rendered by the Appellant. On the basis of the information gathered, it was alleged by the department that the Appellant are rendering the services which are exigible to service tax and the Appellant are not paying the service tax; accordingly, the Appellant were issued two show cause notices for the different periods as stated in the above table. The Appellant filed detailed reply to both the show cause notices and explained their stand. After following the due process, the learned Adjudicating Authority confirmed the demands proposed in both the show cause notices along with interest u/s 75 of the Finance Act, 1994 and also imposed penalties u/s 76 and 78 ibid. Aggrieved by the adjudication order, the Appellant filed appeal before the Commissioner (Appeals) who vide the impugned order upheld the demands as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion does not include a person who provides the main service on his own account and this aspect has been considered in the following judgments: Genpact India (P) Ltd. vs. Union of India - 2023 (68) G.S.T.L. 3 (P H) Principal Commissioner of CGST, Delhi South vs. Comparex India Pvt. Ltd. - 2021 (47) G.S.T.L. 355 (TriDel.) affirmed by Supreme Court in as cited in 2021 (50) G.S.T.L. J9 (S.C.). Evalueserve .Com Pvt. Ltd vs. CST, Gurgaon - 2018 (3) TMI 1430 CESTAT Chandigarh 4.5 He further submits that the learned Commissioner (Appeals) has not followed the decision of this Tribunal even after noting the fact that the same issue in the Appellant s own case has already been decided by this Tribunal vide Order dated 16.03.2018, wherein the demand proposed for the period 2009 to 2014 was dropped. The learned Commissioner (Appeals) has passed the impugned order by violating the principles of natural justice because the decision rendered by the Tribunal is binding on the lower authorities. The learned Commissioner (Appeals) has failed to follow the judicial discipline by ignoring the judicial precedents. He also submits that the service tax demand in the impugned order has been computed wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of Intermediary Service as defied under Rule 2(f) of the Place of Provision of Service Rules, 2012, which is reproduced herein below: 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. 8. Further, we find that CBIC Circular No. 159/15/2021 dated 20.09.2021 explains the concept of Intermediary Services as below: Intermediary services Scope of Clarification on doubts Circular No. 159/15/2021-GST, dated 20-9-2021 F. No. CBIC-20001/8/2021-GST Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes Customs, New Delhi Subject : Clarification on doubts related to scope of Intermediary - Reg. Representations have been received citing ambiguity caused in interpretation of the scope of Intermediary services in the GST Law. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. 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 goods or 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 provider-means a broker, an agent or any other person, by whatever name called... . This part of the definition is not inclusive but uses the expression means and does not expand the definition by any known expression of expans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India. 4. Applying the abovementioned guiding principles, the issue of intermediary services is clarified through the following illustrations : Illustration 1 A is a manufacturer and supplier of a machine. C helps A in selling the machine by identifying client B who wants to purchase this machine and helps in finalizing the contract of supply of machine by A to B . C charges A for his services of locating B and helping in finalizing the sale of machine between A and B , for which C invoices A and is paid by A for the same. While A and B are involved in the main supply of the machinery, C , is facilitating the supply of machine between A and B . In this arrangement, C is providing the ancillary supply of arranging or facilitating the main supply of machinery between A and B and therefore, C is an intermediary and is providing intermediary service to A . Illustration 2 A is a software company which develops software for the clients as per their requirement. A has a contract with B for providing some custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services within the meaning of sub-section (13) of section 2 of the IGST Act, would depend upon the facts of the specific case. While examining the facts of the case and the terms of contract, the basic characteristics of intermediary services, as discussed in para 3 above, should be kept in consideration. 6. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow. 9. Further, we find that Hon ble Punjab Haryana High Court in the case of Genpact India Pvt. Ltd. (supra) has held that the following three conditions must be satisfied primarily for a person to qualify as an Intermediary: the relationship between the parties must be that of a principal-agency relationship. the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an intermediary is to mediate between two parties i.e. the principal service provider (the 3rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and they act as intermediary. The appellant are processing equipment supply order s including liaison/coordination , so the liaison/coordination is also equivalent to solicitation and is more near to intermediary nature that the act of solicitation. Each mandate where there are two or more than two companies are involved would not automatically by termed as intermediary merely on the ground of involvement of two or more companies. To be intermediary, the criteria laid down has been discussed hereinabove. We hold that the respondent is not intermediary. 14 . We further take note of the fact that the activity of the appellant is routine back office process outsourcings activities and are completely based on instructions/guidelines provided by ENSIL/AEs in this regard. The Revenue has not produced any ev idence as to why providing of back office process outsourcing should be treated as intermediary. 11. Further, we find that the Tribunal in the case of Lubrizol Advanced Materials India Pvt. Ltd.- 2019 (1) TMI 720 CESTAT Mumbai has held as under: On perusal of the contracts, I find that the service fee charged by the appellant its overseas group entities for provision of service has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier period this Tribunal vide Final Order dated 16.03.2018 has allowed the appeal of the Appellant and has held that the services rendered/provided by the Appellant do not fall in the definition of Intermediary Services . The Tribunal has also held that the services rendered by the Appellant satisfy the conditions prescribed for the Export of Services and therefore, the Appellant are not liable to pay service tax on the services rendered by them. 14. We also find that the decision of the Tribunal in the Appellant s own case has been relied upon in various cases to hold that the services rendered by the similarly placed assessees are held to be Export of Services and not Intermediary Services . Relevant findings of the Tribunal in the Appellant s own case are reproduced herein below: 7 . The appellant is only disputed their liability on referral service post 01.07.2012 and submits that the appellant is not intermediary, therefore, they are not liable to pay service tax post 01.07.2012. 8 . In these set of facts, following issues emerges: (A) Whether the appellant is intermediary in terms of Rule 2(f) of POPS Rules, 2012 or not? (B) Whether the referral service in question rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to one of the illustration given under paragraph 5.9.6 of the Education Guide, 2012 issued by C.B.E. C. Relevant is extracted as under; Similarly, persons such as call canters, who provide services to their clients by dealing with the customers of the client on the client s behalf, but actually provided these services on their own account , will not be categorized as intermediaries. Applicant relying on above paragraph submitted that call centres, by dealing with customers of their clients, on client s behalf, are providing service to their client on their own account. Similarly, applicant is providing business support service such as marketing and other allied services like oversight of quality of third party customer care centre operated in India and payment processing services, on behalf of GoDaddy US. Therefore, these services provided by the applicant to GoDaddy US cannot be categorized as intermediary or services, as intermediary service. 12 . We further take note of the fact that the provisions of Rule 6A of the POPS Rules, 2012 has been declared ultra virus by the Hon ble High Court of Delhi in the case of Association of Tour Operators (Supra). In that circumstance, al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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