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TMI Blog2024 (12) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... defence, specialised vehicles, turf care and fuel systems. They were providing taxable services under the category of 'Information Technology Services', 'Business Auxiliary Services', 'Business Support Services' etc. The appellants were issued show-cause notices demanding service tax amounting to Rs. 9,01,84,288/- and Rs. 9,33,46,234/- for the period 01.07.2012 31.03.2015 and 01.04.2015 to 30.06.2017 which they wrongly claimed as export services with interest and penalty. On adjudication, the demands were confirmed with interest and penalty. Hence, the present appeals. 3.1. At the outset, the learned advocate for the appellant has submitted that in the impugned orders, the learned Commissioner has wrongly observed that the appellant collects orders from the buyers in India and processed the same on behalf of Textron Inc. It is wrongly assumed that the services undertaken by the appellant is that of an intermediary service and hence does not satisfy the conditions of export service under Rule 6A of the Service Tax Rules, 1994. He has submitted that the appellant had entered into a Master Service Agreement for rendering marketing and sourcing services on principal to princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Xilinx India Technology Services Pvt Ltd v. The Special Commissioner Zone & Anr., 2023-VIL-619DEL. iii. Integreon Managed Solutions Pvt. Ltd. v. Commissioner of CGST, Mumbai, 2023 (4) TMI 1074 - CESTAT Mumbai] 3.4. Further, he has submitted that the appellant does not facilitate or arrange any supply of goods or service between the overseas entities and any other person. There is an absence of three parties in the transaction; hence the definition of intermediary is not satisfied in the present case. In support, they referred to the following judgments:- i. AMD India Pvt Ltd v. CST Bangalore, 2017 (12) TMI 772, CESTAT Bangalore ii. Commissioner of Service Tax v. M/s Tandus Flooring India Pvt Ltd (2015- TIOL-1226-HC-KARST) iii. Go Daddy India Web Services Pvt Ltd. (Ruling No. AAR/ST/08/2016) 3.5. Further, he has submitted that the issue has been considered by this Tribunal in a series of case that marketing and promotional activities by an Indian entity provided to the foreign company by its very nature does not qualify as an intermediary service. In support, they have referred to the following judgments: i. Excelpoint Systems (India) P. Ltd. v. Commissioner of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and marketing c) After sales services d) Representing/liaising with prospective buyers in India including the Central and State Governments, Indian business conglomerates and third-party customers on behalf of Textron Inc. e) Sourcing research and other activities including identification of vendors and suppliers. d) They were also authorised to raise invoices in the name of Textron inc. as per para 3.3 of the agreement. Therefore, the appellants were acting as an agent to their overseas clients since they represent them in all the activities in India. 4.2. Referring to the judgment of the Tribunal in the case of Excel Point Systems (India) P. Ltd. Vs. CST, Bangalore [2018(10) GSTL 254 (Tr. Bang.)], he has submitted that the activities do not result into export of service. Further, he has submitted that in the entire gamut of activities, the appellants were working with third parties on behalf of Textron Inc. Referring to the Board's Circular No. 159/15/2021-GST dated 20.09.2021, he has submitted that the illustration 'A' provided in the said circular is applicable to the activities of marketing including identification of customers carried out by the appellants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chniques, value engineering, quality and quantity improvement, and to generally provide all services to effectively carry out the above activities. These services have been considered by the learned Commissioner as intermediary services and hence fall outside the scope of Rule 6A of the Service Tax Rules, 1994. 8. We find that recently Board has issued a circular bearing No. 159/15/2021-GST dated 20.09.2021 clarifying who should be considered as an 'intermediary' in the context of GST, which is borrowed from the definition of Rule 2(f) of the POPS Rules, 2012. The said circular has been noted in various judgments of this Tribunal and which are referred in the case of Commissioner of CG&ST &CE, Delhi South Vs. Grant Thornton Advisory Pvt. Ltd. [2024(10) TMI 147 - CESTAT NEW DELHI]. The relevant portion of the order reads as follows:- 15. The relevant clauses of the Cost Reimbursement Agreement do not indicate that Grant Thornton, India was to act as an 'intermediary'. The activities undertaken by Grant Thornton, India are for promoting the brand name of Grant Thornton in India. Grant Thornton in India had to provides services on its own account and merely because Grant Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(13) of the Integrated Goods and Service Tax Act, 2017 is pari-materia with the definition of 'intermediary services' in rule 2 (f) of the 2012 Rules. The meaning of 'intermediary services' has been considered by the Punjab and Haryana High Court in Genpact India Pvt. Ltd. vs. Union of India [2023 (68) GSTL 3 (P&H)]. The issue that arose for consideration before the High Court was whether the services rendered by the petitioner under the agreement could be treated as 'intermediary services' under the provisions of the IGST Act. The observations of the High Court are as follows: "28. As per definition of "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 pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, CGST, Delhi [2023 (73) GSTL 161] also considered whether the services claimed were actually exported and convertible foreign exchange was received by the party in lieu of the said export of services. The observations of the High Court are as follows: "33. In terms of sub-section (8) of Section 13 of the IGST Act, the place of supply of certain services would be the location of the supplier of the services. In terms of clause (b) of sub-section (8) of Section 13 of the IGST Act, the place of supply of intermediary services is the location of the supplier of services. In the present case, the 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 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is thus evident that the appellant met the criteria under Rule 6A(1) of the ST Rules and therefore being "export of service" was not amenable to service tax. 17. We may now consider the stand of the department that the services rendered by the appellant has to be treated as "intermediary services" defined under Rule 2(f) of the Rules, 2012. From the definition of "intermediary services", we find that activity between two parties cannot be considered as an intermediate service as intermediary essentially arranges or facilitates the main supply between two or more persons, which is not the case here. Further, the definition of intermediary service excludes any person who has provided the service on their own account. Here from the facts, it is evident that the appellant has provided the service on his own account to the recipient of service, i.e. the foreign university placed beyond the taxable territory of India. Referring to Rule 6 of Rules, 2012, the learned Counsel submitted that they were providing services relating to specific event, i.e. recruitment of students for admission in educational institution/universities, i.e. recipients located outside India and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omeone who arranges or facilitates the supply of goods or services or securities between two or more persons. In other words, there is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply. The present case is more or less similar to the Illustration 4 of the said Circular dated 20.09.2021, which is reproduced below:- Illustration 4 'A' is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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