Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Commissioner of Service Tax, Mumbai-IV Versus M/s. Gupshup Technology India Pvt. Ltd.

2017 (11) TMI 659 - CESTAT MUMBAI

Refund of unutilized CENVAT credit - export of services - providing SMS Aggregator services to facebook, Ireland - rejection on the ground that the services of BSS provided by the Respondent to M/s Facebook does not qualify as export of service - whether the Respondent are eligible to refund of accumulated cenvat of input services in terms of Rule 5 of Cenvat Credit Rules? - Held that: - Under the terms of agreement we find that the Respondent is getting paid by the facebook based upon the numbe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ir role in services provided by Facebook. The Respondent and the subscribers are not into contractual agreement. There is no consideration flowing to the Respondent from such subscribers. The Respondent is working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs - The Tribunal in the case of M/s Paul Merchants Ltd. [2012 (12) TMI 424 - CESTAT, DELHI (LB)] has held that Export of Services Rules, 2005 and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n case location of the service provider is not available in the ordinary course of business, the place of the provision shall be the location of the provider of Service. Further as per Rule 2 (i) of the said Rules the Location of Service Provider is the location of his business establishment. In the case in hand there is no dispute about the facts that the service recipient is Facebook which is located outside India and thus its location is available. Hence the Indian subscribers of Facebook can .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f Cenvat Credit Rules, 2004 is admissible to the respondent. - Appeal dismissed - decided against Revenue. - ST/86913 to 86916/16 - A/90582-90585/17/STB - Dated:- 6-11-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri M. K. Sarangi, Addl. Commr. (A.R.) for Appellant Shri B. K. Sinha, Consultant for respondent ORDER Per : Ramesh Nair These Appeals have been filed by the Revenue against the Order-in-Appeal No.MUM-SVTAX-002-APP- 120 to 123-16-17 dt. 11.05.2016 wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, Ireland and the amount was received in convertible foreign currency. They filed four refund applications towards refund of unutilized cenvat credit of input services used for export of services in terms of Rule 5 of Cenvat Credit Rules,2004 readwith Notification No.27/2012 CE (NT) DT. 18.06.2012. The Respondent claimed that the services were exported to their client M/s Facebook Ireland Limited during the period January, 2014 to December, 2014. The claim for the period January to March 2014 an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

jected. 3. Hence all the present appeals by Revenue. 4. The Revenue has filed appeal on following grounds : 4.1 The Respondent provide SMS Aggregator services to Facebook within India. The SMS Messages are sent to subscribers of facebook as directed by Facebook. The assessee provided the services in India on behalf of Facebook. Service is provided and consumed in India. Both the actual service provider and recipients of services are located in India. Facebook hired the assessee to provide servic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

recipient of the service. The contract is only to enable the assessee to provide services in india on behalf of Facebook. As per Rule 8 of POP, place of provision of service is the location of the recipient of the sercvie where the service provider and sercvie recipient are located in the same taxable territory. Therefore the transaction under consideration cannot be treated as export of services. Hence the impugned order, which sanctioned the refund treating the said BSS Service as export of se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed in allowing the appeal of the assessee and rejecting appeal of revenue. 4.5 The Ld. AR also submitted that the legal effect of majority view in case of Paul Merchant is as good as that of Single member Bench. That the said case has been decided against the very basic of service tax i.e consumption based tax, rather focus has been made on persons who pays for the service. The same was followed in Vodafone case. He also filed written submissions. 5. Shri B.K. Sinha, Ld. Consultant appearing for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

acebook's and each telecom operator's SMS-C and Facebook's point of entry as applicable. They transmit MT or SMS message originated by Facebook to a subscriber via the Webaroo network and an operator's SMS-C to subscriber and also transmit MO or SMS messge originated by a subscriber to Facebook via and operator's SMS-C and the Webaroo network. All deliverables are property of facebook. All users, usage and other data generated or collected in the course of providing the servi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ebook. They cannot charge any fee to the subscriber or send any message to any subscriber other than the SMS message as directed by Facebook. Thus they are simply acting as an aggregator providing SMS Aggregator services to Facebook i.e Application Programming Interface (API) connected with Facebook server which are located in USA & Ireland. The Facebook initiates the transmission of SMS from their server located outside India through assessee's API connectivity and the assessee provides .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cebook for which they are paid entirely by Facebook. As per express clause they are in no way to deal with the persons to whom they send SMSs and their role is limited. He relies upon the para 5.3.3 of the Education guide dt. 26.06.2012 issued by CBEC to contend that the person who is obliged to make payment to the service provider is service recipient. The subscribers of Facebook are not under obligation to make any payment for any services to Respondent or even to Facebook instead Facebook is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tant. They do not have any control on SMS. In such a situation there cannot be any reason to hold the Facebook subscribers are service receiver of the respondent, when the subscriber would not be even aware about the identity of the respondent at all. He also placed reliance on Trade Notice No.20/13-14 ST-I dt. 10/02/2014 issued by the Commissioner of Service Tax Mumbai in case of service tax on bank charges paid by foreign banks, clarified that, for a person to be treated as recipient of servic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sent case as it categorically states that where the location of the service recipient is not available in the ordinary course of business, the place of provision shall be the location of the recipient of service. In terms of definition of location of the service receiver provided in rule 2 (i) of POP Rules wherein it is stated that location of service provider is premises for which service tax registration has not been taken then the location of his business establishment. The business location .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e recipient i.e M/s Facebook is located in Ireland which is a non taxable territory and therefore the provisions of Rule 8 would not apply. He submits that the services clearly fall under the term of Export of Service under Rule 6A of Service Tax Rules and the revenue's ground is baseless. He also submits that in case of Muthoot Finance Ltd Vs. UOI - 2015 (40) STR 26 (KER), the Hon ble Kerala High Court while dwelling upon the issue as to whether the adjudicating authority is bound to follow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Tribunal in following cases : (i) SIMPRA AGENCIES Vs. CCE, DELHI - 2014 (36) STR 430 (TRI DEL) (ii) COMM. OF SERVICE TAX, MUMBAI Vs. VODAFONE INDIA LTD. - 2015 (37) STR 286 (TRI) (iii) GAP INTENRANTIONAL SOUR. (I) PVT. LTD Vs. COMM. OF ST, DELHI - 2015 (37) STR 757 (TRI DEL) (iv) INTERNATIONAL OVERSEAS SERVCIES & COMMR. OF ST, MUMBAI-I - 2016 (41) STR 230 (TRI) 6. We have carefully considered the submissions made by both the sides and perused the appeal records and written submissions. 7. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an subscribers of M/s Facebook Ireland. The Respondent is liable to provide the SMS Aggregator service to M/s Facebook i.e Application programming Interface (API) connected with Facebook Server. The Respondent is working on directions and Instructions of Facebook. The facebook initiates the transmission of SMS from their server located outside India through Respondent's API connectivity and respondent provides the services to M/s Facebook by sending or receiving SMS to subscribers of Faceboo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs of Facebook. Under the terms of agreement we find that the Respondent is getting paid by the facebook based upon the number of SMS messages successfully transmitted through Respondent's network. It also provides the fees based upon the Billable Message Length , Unicode Message, Undelivered Message which would not be chargeable, Long Codes fees etc. It provides the fee structure based upon nature of message. In sum and substance the Respondent is rendering services to M/s Facebook and gett .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he services are not provided to any Indian Subscriber by the Respondent. The Respondent has no connection/ interaction or relation with the Indian subscribers of Facebook. The services are provided under the terms and conditions of the agreement made between M/s Facebook Ireland and the Respondent. The Respondent is not charging any service charges or part thereof from the Indian subscribers. The CBEC itself in its education guide Para 5.3.3 has clarified that the person who is obliged to make p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or received. The subscriber of Facebook are not even aware the existence of Respondent and the type of services rendered by the Respondent. It is expressly stated in Para 3 of the agreement that "Webaroo will not charge any fee to, make any offer to otherwise communicate with any subscriber in connection with the service or this agreement". It is absolutely clear from the nature of services and agreement therefor that the respondent cannot be treated as service provider to subscribers .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which may be oral or written. The importer and exporter does not even know who the service provider is, as they are not aware of the identity of the foreign banks which would be providing services. Exporter or importer in India does not have any formal or informal agreement with the foreign bank. Importer or exporter in India does not even know the quantum of charges which the foreign bank would be recovering. Therefore, in view of the above mentioned factual position and also in view of the va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs. The Tribunal in the case of M/s Paul Merchants Ltd. - 2013 (29) STR (Tri) held as under : Export of services - Tests of - Foreign destination and crossing of international border - It is necessary in respect of export of goods in terms of Section 2(18) of Customs Act, 1962, but not in respect of export of services - Services are different from go .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sible to apply - In that view, principle of equivalence between taxation of goods and service was inapplicable - Also, due to their intangible nature and different modes of consumption by recipient, determining place of consumption of service is a complex task, and for that purpose uniform criteria for different categories viz. services in relation to immovable property, business, transport, performance based, etc. cannot be adopted - However, what constitutes export of service cannot be left to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ents in All India Federation of Tax Practitioner [2007 (7) S.T.R. 625 (S.C.)] and Association of Leasing & Financial Service Companies [2010 (20) S.T.R. 417 (S.C.)]. 7.2 The aforesaid decision was relied upon by the Tribunal Divisonal Bench in case of M/s Vodaphone Essar cellular Ltd. - 2013 (31) STR 738 (TRI) holding as under : Rebate Export of services Telecom service provided in India to International in-bound roamers registered with foreign telecom network operator Payment received from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er billed for services rendered Ratio of Tribunal's decision in Paul Merchants [2013 (29) S.T.R. 257 (Tribunal)] squarely applicable Subscriber of foreign telecom service provider not recipient of service Rule 3(1)(iii) of Export of Service Rules, 2005. 7.3 The various benches of Tribunal has adopted the same view in case of SIMPRA AGENCIES Vs. CCE, DELHI - 2014 (36) STR 430 (TRI DEL); GAP INTENRANTIONAL SOURCING (INDIA) PVT. LTD Vs. COMM. OF ST, DELHI - 2015 (37) STR 757 (TRI DEL) and INTER .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version