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TMI Blog2024 (11) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... supply, 'A' is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. 'A' decides to outsource the task of providing customer care services to a BPO firm, 'B'. 'B' provides customer care service to 'A' by interacting with the customers of 'A' and addressing / processing their queries / complains. 'B' charges 'A' for this service. 'B' is involved in supply of main service 'customer care service' to 'A', and therefore, B' is not an intermediary. No merit in the appeal filed by the Revenue. - HON'BLE DR. D. M. MISRA , MEMBER ( JUDICIAL ) And HON'BLE MRS R BHAGYA DEVI , MEMBER ( TECHNICAL ) Mr. Shailendra S Satloja, Chartered Accountant for the Appellant Mr. M. A. Jithendra, Assistant Commissioner (AR) for the Respondent ORDER PER : DR. D.M. MISRA This is an appeal filed by the Revenue against Order-in-Original No.82/2018 dated 14.12.2018 passed by the Commissioner of Central Tax, Bengaluru East, Bengaluru. 2.1. Briefly stated the facts of the case are that respondent are registered with the Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice is vitiated by vagueness on non-framing of specific charges. He has submitted that the show-cause notice has specifically alleged that the services provided by the appellant fall under the scope of intermediary service as per provisions of Rule 9 of POPS Rules, 2012; the place of provision is the location of the service provider which is in India; therefore, the service does not qualify as an export service in terms of Rule 6A of the Service Tax Rules, 1994. Further, he has submitted that in the show-cause notice, it has been elaborately discussed the description of services rendered and each of the aspects of the said service with reasons for considering the same as intermediary service ; hence, the finding the learned Commissioner that the show-cause notice is vague is incorrect. 3.2. Referring to the agreement dated 02.05.2003 and subsequent amendments, the learned AR has submitted that the respondent were raising a single invoice in collecting consideration for Marketing Sales Support Service and Customer Support Service provided by them to the parent company which is described in the invoice as ITSS and BSS. Further, w.e.f. 01.04.2017, the respondent entered into thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the consideration for the said services is paid on cost+ mark-up basis; thus, the respondent had provided the services on principal-to-principal basis and no an intermediary service. Further, referring to the Education Guide issued by Board, he has submitted that Customer Support Services do not qualify as an intermediary service as clarified thereunder. He has referred to a recent Circular No.159/15/2021-GST dated 20.09.2021 issued by Board where customer support service is not treated as an intermediary . In support, he has referred to the following judgments:- i. Excelpoint Systems India Pvt. Ltd. Vs. CST Bangalore [2022-TIOL-303-CESTAT-BANG] ii. Excelpoint Systems (India) Pvt. Ltd. Vs. CST(Appeals-I), Bangalore [MANU/KA/4776/2021] iii. Balckberry India Private Limited Vs. CCT/CCE, Delhi [2022(12) TMI 660-CESTAT NEW DELHI] iv. AMD India Pvt. Ltd. Vs. CST, Bangalore [2017(12) TMI 772 -CESTAT BANGALORE] 4.2. The learned Chartered Accountant for the respondent has also submitted that since there is no fraud, misstatement, misdeclaration or suppression of facts with intent to evade payment of duty, the demand invoking extended period of limitation cannot be sustained. 5. Heard b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the above, I find that the services of: (a) identification of potential customers, (b) providing information and educating potential customers, (c) procuring information from the client in terms of their requirements, expectation regarding the pricing of the product, (d) passing on the information to their foreign company, (e) providing demonstrations and presentations to the customer on the application of the products (f) maintenance and support services for the products are provided to customers in the Asia-Pacific market and going by the tenor and tone of the agreement, it is clear that the relationship between Informatica USA and Informatica India is on a principal to principal basis (even para 36.2 of the SCN states that both are independent) and Informatica India is not acting as an agent or broker. Basically Informatica India is providing Business support services to Informatica USA and the place of provision of such services ought to be determined under Rule 3 of POPS and not under Rule 9 of POPS. 86.5. I find that though the SCN seeks to rely on certain clauses in the agreement, it has not brought out as to how on the basis of the above said clauses a conclusion has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be an intermediary with reference to the services provided to universities, colleges and banks and whether any service tax could be levied. The observations of the Tribunal are as follows: 10. We find that the appellant is nowhere providing services between two or more persons. In fact, the appellant is providing services to their clients namely banks/colleges/university who are paying commission/ fees to the appellant. The appellant is only facilitating the aspirant student and introduced them to the college and if these students gets admission to the college, the appellant gets certain commission which is in nature of promoting the business of the college and for referring investors borrow loan from foreign based bank to the people who wishes settled in Canada on that if the deal matures, the appellant is getting certain commission. So the nature of service provided by the appellant is the promotion of business of their client, in terms, he gets commission which is covered under Business Auxiliary Service which is not the main service provided by the main service providers namely banks/university. As the appellant did not arrange or facilitate main service i.e. education or loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined to mean 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 on his account. 37. A perusal of the definition of intermediary under the service tax regime vis-a-vis the GST regime would show that the definition has remained similar. Even as per circular dated 20-9-2021 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (GST Policy Wing), the scope of intermediary services has been dealt in Para 2 thereof. In Para 2.2 it stands clarified that the concept of intermediary was borrowed in GST from the Service Tax Regime. The circular after making a reference to the definition of intermediary both under Rule 2(f) of the Place of Provision of Service Rules, 2012 and under Section 2(13) of the IGST Act clearly states 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 interme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the department has lost sight of this essential difference. The High Court of Delhi then considered the decision of the Larger Bench of the Tribunal in Paul Merchants Ltd. vs. CCE, Chandigarh [2012 (12) TMI 424-CESTAT-DEL.-LB], which was rendered with reference to ESR, 2005 where the assessees were intermediary agents, providing money transfer services to foreign travellers, who were the end user on behalf of their principals and the contention of the department that this did not qualify as export of service was rejected referring to the CBEC clarification letter no. 334/1/2019- TRU dated 26.02.2010 that as long as the party abroad is deriving benefit from service in India, it is an export of service. xxxxxxxxxxxxx 16. Needless to mention, as per the agreement between the appellant and the foreign university the services were delivered outside India as the recipient of service is the foreign universities who are located outside India and the benefit of service rendered by the appellant also accrued outside India, coupled with the fact that the appellant received the payment against the services in convertible foreign exchange and the appellant and the recipient of service are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose instructions the services in question had been provided by the agents/sub-agents in India, who is liable to make payment for these services and who used the service for his business, is located abroad, the destination of the services in question has to be treated abroad. The destination has to be decided on the basis of the place of consumption, not the place of performance of Service. 22. In Vodafone Essar Cellular Ltd. vs. CCE, Pune-III [2013 (7) TMI 178 CESTAT- MUMBAI] the Tribunal explained the arrangement in the following words: Your customer s customer is not your customer. When a service is rendered to a third party at the behest of your customer, the service recipient is your customer and not the third party. For example, when a florist delivers a bouquet on your request to your friend for which you make the payment, as far as the florist is concerned you are the customer and not your friend. 23. The aforesaid discussion leads to the inevitable conclusion that Grant Thornton, India is not an intermediary and that the services provided by it to Grant Thornton, London are export of services . 11. The basic requirement to be an intermediary is that there should be at lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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