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TMI Blog2025 (1) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... he foreign parties can carry out the actual negotiations themselves. For the above purpose, the Appellant entered into Agreement with M/s Werner Pfleiderer & Gmbh Co. KG, Germany and M/s Coperion Waeschle Gmbh & Co. KG, Germany dated 01.01.2007. The sequence of events as traced from the impugned Agreement is that; first the Appellant interacts with the customers in India, who place their orders with the group entity. Thereafter, the group entity exports the goods from Germany to the customers in India and raises the invoices directly on the customers. These orders materialize only when the acceptance or confirmation has been issued by the group entity to the customers and the Appellant cannot confirm these orders. Upon confirmation of the order, materials are dispatched to the customers directly by the group entity and payment related to the materials are dealt with directly by the buyer and the group entity. Thus, the Appellant's role is limited to acting as a bridge between the foreign parties and their customers in India and does not involve acceptance or confirmation of any order. The Appellant raises invoices for its commission on foreign parties in Germany as soon as the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the goods nor they made negotiations with the potential customers for the sale of the goods, therefore, the Adjudicating Authority held that the Appellant acted as an intermediary for arranging or facilitating a provision of BAS and as such amendment made in the definition of intermediary w.e.f. 01.10.2014 is not relevant to the present case. It is submitted that as per the definition of intermediary, it does not provide its own services but arranges or facilitates services provided by one person to another person. The Adjudicating Authority clearly held that the Appellant is providing BAS. The Adjudicating Authority has not pointed out whose services and what kind of services of another person were arranged or facilitated by the Appellant. In absence of the determination of the fact whose services and what services were being arranged or facilitated by the Appellant, the finding that the Appellant was acting as an intermediary is illegal and unjustified. The services referred to as BAS was the service of the Appellant themselves, therefore, there cannot be a service of another person which the Appellant facilitated or arranged. Thus, the findings of the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption tax in the sense that it is levied on commercial activities and it is not a charge on the business but a charge on the consumer. We note in the present case, the recipient of service are foreign entities and they are the consumers of these services provided by the appellant/assessee from India. The various persons in India to whom the goods were sold by the foreign entities or from whom various details and information were collected, were not to be considered as recipient of service provided by the appellant/assessee. In Airbus Group India Pvt. Ltd. v. CST, Delhi reported in 2016-TIOL-2312-CESTAT-DEL. = 2016 (45) S.T.R. 120 (Tri.-Del.), the Tribunal after referring to the decisions in Paul Merchants Ltd. (supra), Microsoft Corporation (I) (P) Ltd. v. CST, New Delhi reported in 2014 (36) S.T.R. 766 (Tri.-Del.) and Gap International Sourcing India Pvt. Ltd. reported in 2014-TIOL-465 CESTAT-DEL. = 2015 (37) S.T.R. 757 (Tri) held that what constitutes export of service is to be determined strictly in accordance with the "Export of Service Rules, 2005". It is the person who requested for the said service and is liable to make payment for the same, who has to be treated as recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Judicial) clearly pointed out that "Appellant provides them with details of customers in India and information related to domestic market conditions so as to enable the foreign parties to prepare appropriate quotes for their customers so that the foreign parties can carry out the actual negotiations themselves. For the above purpose, the Appellant entered into Agreement with M/s Werner Pfleiderer & Gmbh Co. KG, Germany and M/s Coperion Waeschle Gmbh & Co. KG, Germany dated 01.01.2007. The sequence of events as traced from the impugned Agreement is that; first the Appellant interacts with the customers in India, who place their orders with the group entity. Thereafter, the group entity exports the goods from Germany to the customers in India and raises the invoices directly on the customers. These orders materialize only when the acceptance or confirmation has been issued by the group entity to the customers and the Appellant cannot confirm these orders. Upon confirmation of the order, materials are dispatched to the customers directly by the group entity and payment related to the materials are dealt with directly by the buyer and the group entity. Thus, the Appellant's role is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as is clear from the agreement between the appellant and the overseas company. The definition of 'Intermediary' under Rule2(f) of the POPS Rules, 2012 reads as under : Before amendment "(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 on his account." After amendment w.e.f. 1-10-2014 "(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." 16. There is merit in the contention of the appellant that since 'goods' was not covered under the scope of definition of 'intermediary', therefore, for the period prior to 1-10-2014 confirmation of demand is bad in law. I find that the definition of intermediary cannot be made applicable to sale of goods for the period pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is considered as place of provision of services for the purpose of levy of service tax for the period when the appellant is covered by the definition of the intermediary, the place of provision of service, the location of service provider i.e. the taxable territory of India. Hence the benefit of export of services could not be extended to the an intermediary located in India. 15.0 For the period up till the date of this amendment which cover the period in demand, the services of appellant though of the intermediary are excluded from the said definition. In such cases, the fact whether the services are for export of services needs to be determined without treating the appellant as an intermediary. As per the Rule 3 of the Place of Provision of Services Rules in cases such cases the place of provision of service is location of the service recipient, which in the present case is outside India. Appellant are receiving payment against the provisions of these services in convertible foreign exchange. Thus, these services would qualify to get the benefit of export of services as per Rule 6 of the Service Tax Rules, 1994. Thus for this period there cannot be any levy of service tax and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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