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2024 (1) TMI 887 - CESTAT HYDERABADClassification of services - intermediary services or not - privity of contract - services provided by the appellant in connection with sales and services and collection services - taxability of services provided by the appellant to the personnel of foreign customers on their visit to India. Services provided by the appellant in connection with sales and services and collection services - HELD THAT:- From the perusal of the definition of intermediary extracted herein above and the CBIC Circular of 20.09.2021, show that the sub contracting arrangement would not fall within the purview of intermediary. In the instant case, from the perusal of the sub-contracting agreement referred to hereinabove it is seen that the services undertaken by the group entity HGRL, UK have been sub-contracted to the appellants. There is no privity of contract between the appellants and the Business Partners. Service level monitoring takes place in terms of the Performance Level agreement (PLA). Even here, as provided in the PLA, the terms of the subcontracting agreement shall always prevail in case of any conflict. The responsibility and liability is only between the appellant and the group entity - HGRL from whom compensation is received on cost-plus basis in convertible foreign exchange. It is well settled in terms of the decisions cited by the learned Counsel in Genpact [2022 (11) TMI 743 - PUNJAB AND HARYANA HIGH COURT] and Singtel [2023 (9) TMI 304 - DELHI HIGH COURT] that where the relationship between the parties is on principal to principal basis, such an arrangement cannot come within the purview of intermediary services. In view of the Board Circular and the precedent decisions it is not possible to accept the view expressed by the Commissioner in Para 31 of the First Order and Para 16 of Second Order on the interpretation of Rule 2(f) of the POPS. The finding that principal-agency relationship is not essential for terming a service provider as intermediary, is clearly contrary to law - Also, the elements of service, namely collections and contact center services for credit/debit card operations, are essentially part of the bundled services and in terms of Section 66F(3)(a), will qualify as part of main service - the elements of service, namely collection services and contact center services for credit/debit card operations, cannot be held to be intermediary services. Taxability of reimbursement claimed by the appellant for accommodation and cab charges, incurred by the appellant on behalf of HGRL/Business Partners - HELD THAT:- At any rate, for the service to be classified as rent-a-cab in terms of Section 65(91), upto 30.06.2012, the service is to be provided by a person engaged in the business of renting of cabs, which is not the case in the context of the present appellants. Also, with respect to the period after 01.07.2012, the transportation services cannot fall under Rule 11 of POPS, for determining the place of provision as taxable territory, as in the facts of this case it does not satisfy the definition of ‘continuous journey’ as per Rule 2(d) of the said Rules - the costs towards rent-a-cab claimed from HGRL, UK which is remitted by the HGRL UK to the appellants in convertible foreign exchange cannot be taxed for the period from 01.10.2010 to 30.06.2012 under Rule 3(1)(ii) of the Export of Service Rules, 2005 and Rule 11 of the POPS post 01.07.2012. Similarly, the costs towards accommodation claimed from HGRL, UK cannot be taxed for the period from 01.07.2012, in terms of Rule 5 of the POPS - levy of service tax in the First Order on accommodation services and rent-a-cab services set aside. Appeal allowed.
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