9911796707
TMI Blog2024 (12) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. It is made very clear in the service level agreement that it is between the customer (M/s Saxo Bank Netherlands) and the provider. To that extent, it is found that the findings of the learned Appellate Commissioner are beyond the Show Cause Notice and the Original Order. It is also found that the Show Cause Notice just refers to the definition of Intermediary and assumes that the services rendered by the appellants are in the nature of intermediary, without going into the various clauses of the agreements - it is not correct for the appellate authority to hold that the appellants are rendering services to the customer of their foreign principal. On going through the different clauses of the agreement that there is nothing to indicate that the appellants are working as Intermediary as there is no mention of any service to be rendered by the appellants to any third party. Thus, either in respect of ITSS Services or BSS Services, the appellants acted as Intermediary. Whether the non-submission of FIRC certificates would dis-entitle them to the claim of refund? - HELD THAT:- The impugned order holds that the appellants have not submitted some of the FIRCs though the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected the claim of the appellants for refund of CENVAT credit on export of BSS holding that the appellants were intermediary. The appellants are not eligible for refund where Foreign Inward Remittances Certificates were not provided. 2. Against the impugned order, Department is in appeal (ST/60652/2019) against the grant of refund on ITSS while the appellants are in appeal (ST/60579/2019)against the refund rejected in respect of BSS. 3. Shri Deepak Thackur, learned Counsel for the appellant, submits that the appellant satisfies each of the conditions mentioned in the CENVAT Credit Rules and the services rendered qualify to be export of service as defined under Rule 6A of Service Tax Rules, 1994. He takes us through the relevant provisions regarding the definition of ITSS, BSS, Intermediary Services and the Education Guide issued in this regard and submits that in terms of the CBIC Circular No.159/15/2021 dated 20.09.2021, any back-end services provided by an assessee in India will not qualify as an Intermediary Services; even though the Circular is issued under the GST Regime, it is applicable to the service tax. He further submits that the appellant‟s agreement with the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants have been informed very clearly the deficiencies in the refund applications. He takes us through the Education Guide and presents the Department‟s case. 7. Heard both sides and perused the records the case. Brief issue that requires to be addressed in the case is as to whether the appellants have rendered intermediary services in respect of services provided by them and as to whether the non-submission of FIRC certificates would dis-entitle them to the claim of refund. We find that it is beneficial to have a look at the legal position in this matter. Section 2(f) of Place of Provision Rules, 2012 defines an Intermediary as follows: 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. We find that CBIC vide Circular No.159/15/2021-GST dated 20.09.2021 clarified Intermediary Services while making it clear that there is broadly no change in the scope of intermediary services in the GST Regime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e role of intermediary is only supportive 3.4 Does not include a person who supplies such goods or services or both or securities on his own account: The definition of intermediary services specifically mentions that intermediary does not include a person who supplies such goods or services or both or securities on his own account . Use of word such in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the services not covered under negative list of services. Therefore, the place of provision of the service, receipt of convertible foreign exchange and the point of separate entity in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act needs to be discussed. In order to determine the place of provision of service and whether a person is acting as an intermediary or not, the following factors need to be considered: - Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary's service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as commission . Ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected the refund claims by classifying the said ITSS services as an intermediary and the appellant's refund claim is allowable to this extent. 10.1. In respect of BSS, he finds that they are intermediary service observing that : On perusal of above Service level agreement, it appears that the appellant is dealing with both the Saxo Bank Netherlands and its customers and thus acting as an intermediary. The appellant is providing multitasking services to its global entities including query support and other facilitations to their customers/clients as well. The appellant appears to merely act as a facilitator in provision of the main service. As Rule 9 of the Place of Provision of Services Rules, 2012 as amended, the place of provision of the following services shall be the Services Rules, 2012 as amended, the place of provision of the intermediary services shall be the location of the service provider, hence all the services provided by the appellants, as evident form aforesaid terms of agreement and are naturally bundled as a single service i.e. BSS by an 'intermediately under the 'place of provision of Services Rules 2012'. Further, the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f intermediary under Section 2(13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an intermediary ; - 29. First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, 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 (the agents principal) who receives the main service and expressly excludes any person who provides such main service on his own account . 14. We find that, though, the judgment is rendered in the context of GST, the principles are not very much different We find on going through the different clauses of the agreement that there is nothing to indicate that the appellants are working as Intermediary as there is no mention of any service to be rendered by the appellants to any third party. Thus, we are of the considered opinion that either in respect of ITSS Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermine the quantum of admissible refund from the accumulated Cenvat credit. It cannot be considered to be a proceeding for denial of Cenvat credit available in the account of the claimant and therefore even if the refund is denied then also the amount continues to remain in the Cenvat account of the claimant. If the Revenue is not in agreement with the claims of the appellants and if, according to Revenue, the services in issue do not fall within the ambit of export of service then the Revenue ought to have initiated the proceedings against the appellants for demanding the Service Tax in respect of taxable service provided by the appellants. Admittedly no such proceedings have been initiated by the Revenue as borne out from the records of the case and therefore in a way Revenue itself has allowed this taxable service provided by appellants as export of service. If that is so then in the proceeding under Rule 5 ibid Revenue cannot deny refund by treating the service provided not to be export of service. Same principle has been followed by the Tribunal in the matter of JFE Steel India Pvt. Ltd. v. Commissioner CGST, Gurugram, 2021 (44) G.S.T.L. 292 (Tri. - Chan.) and also in Final Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
