TMI Blog2019 (6) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 9 ibid, the place of provision of these services will be the location of the service provider that is in India. Hence these services cannot be considered as export of service as per Rule 6A of Service Tax Rules, 1994. In terms of 6A(1)(d) for a service to qualify as export of service the place of provision service should be outside India. Since in the present case these services have been provided in India as per Place of Provision of Services Rules, 2012 they cannot be termed as export of services. Intermediary services or not? - HELD THAT:- In the present case the except for routing the payment through LAMHAS, who have entered into the Channel Distribution Agreement with Channel Distribution Partners, the services of Channel Carriage were provided by the Channel Distribution Partners to TV-NOVOSTI directly. Hence the services provided by the LAMHAS in this respect qualify as intermediary services . Bundled services or not - HELD THAT:- The present case is not a case of bundled services, naturally bundled, but is case of providing services which as per the contract itself are not bundled together and hence needs to be examined on its own. In the present case the Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Assistant/ Deputy Commissioner rejecting the refund application filed by the Appellants in terms of Rule 5 of the CENVAT Credit Rules, 2004, revenue has filed the first two appeals. 1.3 Since by the order dated 12.02.2018, Commissioner (Appeal) had rejected the appeals filed by the appellant against the orders of jurisdictional Assistant/ Deputy Commissioner rejecting the refund application filed by the Appellants in terms of Rule 5 of the CENVAT Credit Rules, 2004, assessee (Claimant) has filed the last two appeals. 1.4 As the issues involved in all the four appeals are identical all four appeals have been taken up together. 2.1 Lamhas Satellite Services Ltd (herein after referred as claimant ) had been filing refund claim in terms of Rule 5 of CENVAT Credit Rules, 2004, for claiming the refund of accumulated credit against the export of services. 2.3 After consideration of the refund claim after issuing the show cause notice and taking into consideration the submissions of the claimant, jurisdictional Assistant/ Deputy Commissioner rejected the four claims filed by the claimant vide his orders dated 16.01.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. They are conducting their business on their own behalf only and do not qualify as intermediary as defined under Place of Provision Rules, 2012 and held by Commissioner (Appeal). Since they do not qualify as intermediary , the place of provision of services will have to be determined as per Rule 3 and not as per rule 9(c) ibid. ii. They satisfy all the conditions prescribed by Rule 6A of Service Tax Rules, 1994, for determining whether the service provided is export of service or not. Since they fulfill all the conditions as laid down by Rule 6A, the services provided by them to Globecast should be considered as Export of Services and benefit of Rule 5 of CENVAT Credit Rules, 2004 be allowed to them. iii. They rely on the decisions of Tribunal In case of Paul Merchants [2013) 29 STR 257 (T) and that of Delhi High Court in case of Verizon Communications India Pvt Ltd [2018 (8) GSTL 32 (Del)] in their favour. iv. Thus the order of Commissioner (Appeal) is erroneous not sustainable. 4.1 We have heard Shri Aditya Kumar Advocate for the Claimant and Shri M Suresh, Assistant Commissioner, Authorized Representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever as they were exporting services they were not in position to utilize the credit. ix. They rely on the decisions in case of Verizon Communication India Private Limited [2018 (8) GSTL 32 (DEL)] and Paul Merchants Ltd [2012 (12) TMI 424 CESTAT Delhi (LB)], wherein the issue has been squarely decided in their favour. 4.3 Arguing for the revenue learned Authorized Representative while reiterating the order of Commissioner (Appeal) and the submissions made in the department appeal, stated- i. In the present case for carrying the Russia Today channel various Channel Distribution Partners like Tata Sky DTH, Airtel DTH and various Hotel were receiving the consideration for providing the services. They were also charging service tax for providing the activity of transmission of Russia Today channel in their DTH Network and Hotel Rooms. For providing the services they received consideration along with service tax from the claimant. ii. Thus in terms of the definition of service as defined by Section 65B(44), the actual service provider are Channel Distribution Partners like Tata Sky DTH, Airtel DTH and various Hotel. Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners. g. As per rule 9 of Place of Provision of Service Rules, 2012, place of provision of service in case of intermediary services is in India. Thus in terms of sub clause (d) to Rule 6A, the services provided by the claimant cannot be called as export of service. h. In the above factual matrix the services provided by the claimant do not constitute export of service and hence the benefit under Rule 5 of CENVAT Credit Rules, 2004 will not be admissible to them. Thus the order of Commissioner Appeal dated 18.07.2014 allowing the appeal needs to be set aside and order dated 12.02.2018 be upheld. i. Same issue has been decided in favour of revenue in case of Tech Mahindra Ltd [2014 (36) STR 241 (Bom)] and M/s Excelpoint Systems (India) P Ltd [2018 (10) GSTL 254 (T-Bang)] j. The decisions relied upon by the claimant are in respect of the law as was in force prior to 1.07.2012 and the entire scheme of law has been changed with effect from that date with introduction of Place of Provision of Service Rules, 2012. Hence these decisions are not applicable as the entire period involved is after this date. 5.1 W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would remit the amount to the Claimant and the claimant would pay such fees to the Channel Distribution Partners. The amounts paid by M/s GlobeCast is in USD. 4. It is further seen that the claimant was providing marketing and administrative support in connection with developing and maintaining a base of eligible channel Distribution Partners in India, for which M/s GlobeCast was paying them Profession Fees at the agreed rate, which is inclusive of all the taxes. Such Profession Fees was paid by M/s GlobeCast yearly in advance. Besides, the claimant was also required to monitor the signal distributed by each Channel Distribution Partner, for which the claimant receives service fee of 400 UJSD per month (inclusive of taxes) on quarterly basis. 5. From the foregoing, it is seen that the activities performed by the claimant are downlinking and distribution of the TV Channel Russia Today in India though the Channel Distribution Partners, marketing and administrative support in connection with developing and maintaining base of eligible Channel Distribution Partners and to monitor the signal distributed by each Channel Distribution Partner. The Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service. In our opinion show cause notice has sufficiently disclosed the grounds for disallowance for treating the services to be provided in India. The only omission being no mention of the relevant provisions of Place of Provisions of Service Rules, 2012 in the Show Cause Notice. Since all the ingredients for making the said charge for treating the services to be provided in India have been brought out in the Show Cause Notice, not mentioning of the exact provisions of Place of Provision of Service Rules, 2012 in the Show Cause Notice cannot be fatal to the Show Cause Notice specifically when the case is in respect of Refund. Hon ble Apex Court has in case of [] clearly laid down that mere non mention of/ wrong mention of the relevant provisions of law in the show cause notice cannot be fatal. We quote the relevant excerpts: 5.6 The clauses of the agreement between the claimant and Globecast relevant for considering the issue are reproduced below: Agreement entered on 26.03.2010 AGREEMENT BY AND BETWEEN LAMHAS SATELLITE SERVICES AND GLOBECAST ASIA PTE LTD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WHEREAS, in furtherance of the foregoing, GCF has requested the GlobeCast, and GlobeCast and LAMHAS have agreed to enter into this Agreement. FOR DUE AND FAIR CONSIDERATION RECEIVED, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS: 1. CHANNEL DISTRIBUTION AGREEMENTS A. LAMHAS shall enter into distribution agreement with each of the Indian distribution partners (collectively Channel Distribution Partners ) listed in Annex 1 attached hereto and covering the material terms and conditions governing the distribution of the Channel in India on a free to air basis via the direct to home, CATV, SMATV, Hotels or other Television Broadcast System networks specified in the agreement (each, such agreement deemed a Channel Distribution Agreement ). B. Each Channel Distribution Agreement shall contain such relevant terms as the type/ method of carriage, carriage service fees (and which for avoidance of doubt shall be inclusive of all service and other applicable Indian taxes), terms of payment, term of carriage service (service commencement and expiry dates), and other customary portions. C. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars (US$), in each case in an amount calculated consistent with a mutually-agreed US$/INR exchange rate determined within 24 hours of the intended GlobeCast Carriage Payment date (to minimize exchange rate fluctuations between said date and the corresponding LAMHAS Carriage Fee Payment date) based on quotations secured from at least two (2) nationally recognized financial institutions in India. LAMHAS shall use reasonable commercial efforts to negotiate a favorable exchange rate with the selected financial institution of not more than 5 paisa below the day s published InterBank rate for selling US$. F. Provided that LAMHAS makes the relevant LAMHAS Carriage Fee Payment in a timely manner as required under the relevant Channel Distribution Agreement, then if as a result of an intervening exchange rate fluctuation or other bona-fide reason the converted INR funds received by LAMHAS is less than the required LAMHAS Carriage Fee Payment amount payable to the relevant Channel Distribution Partner, then LAMHAS shall receive a credit from Globe Cast, to be reflected in the immediately succeeding GlobeCast Carriage Fee Payment, for the actual INR shortfall amount. LAMHAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing and administrative support in connection with developing and maintaining a base of eligible Channel Distribution Partners during the terms hereof, in consideration for providing such support, GlobeCast shall, pay LAMHAS professional fees in the amounts listed in Annex 1 herein (collectively LAMHAS Professional Fees ). All LAMHAS Professional Fees shall be inclusive of all service and other relevant service tax. B. Globecast shall pay LAMHAS Professional Fees in United States Dollars (US$) against LAMHAS submitted invoices quoted in United States Dollars (all consistent with Annex thereto). For the avoidance of doubt LAMHAS shall bear any and all US$/ INR exchange rate risk. C. LAMHAS Professional Fees shall be paid by GlobeCast yearly in advance provided the LAMHAS Carriage Fee payment has been paid to the relevant Channel Distribution Partner in full. LAMHAS shall invoice GlobeCast therefor in each case at least thirty (30) days prior to the relevant LAMHAS Professional Fees Payment due date. D. LAMHAS shall provide GlobeCast together with each invoice for LAMHAS Professional Fees, with confirmation notes subsequent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. MISCELLANEOUS A. LAMHAS shall be responsible for securing and maintaining in good standing all necessary and appropriate regulatory licenses, approvals, permits and consents (collectively Consents ) as may be required by the relevant Indian authorities (including but not necessarily limited to those described in Article 2 (Registration of TV-NOVOSTI/ LAMHAS Agreement) for the downlinking and distribution of the Channel in India via Television Broadcast System networks. GlobeCast agrees to reimburse LAMHAS in US$ (at the exchange rate prevailing upon the date of payment as published by a reputed Indian Financial Institution reasonably determined by GlobeCast) for LAMHAS pre-approved direct and reasonable expense incurred in connection with securing such Consents from the Indian authorities rte in each case payable against LASMHAS submission of invoices therefor and associated documented receipts. B. LAMHAS consistent with the LAMHAS/ TVNOVOSTI Agreement shall, in relation to GlobeCast, be solely responsible for the content of the Channel transmitted by the Channel Distribution Partners. C. Nothing in this agreement sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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) between two or more persons, but does not include a person who provides the main service on his account.; In the present case the Channel Carriage for which Channel Carriage Fees is paid by GlobeCast, to Channel Distribution Partner through claimant is the main service which has been provided by the Channel Distribution Partner and not the claimant who has acted only to mediate the provision of service by the Channel Distribution Partner to GlobeCast. This service has in no manner been provided by the claimant to the GlobeCast. In our view the services of mediation of this nature are covered by the term intermediary as defined by Rule 2(f) of the Place Of Provision of Services Rules, 2012. Since these services are covered by the term intermediary, in term of Rule 9 ibid, the place of provision of these services will be the location of the service provider that is in India. Hence these services cannot be considered as export of service as per Rule 6A of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epicted by High Court as follows: The scheme of provision of the service in the present case is as per the flow chart below: From the schemes as depicted above it is very clear that, the head office of the recipient of service was located outside India and was billed by the entity located in USA. Hence the services were held to be provided in USA. In the present case the except for routing the payment through LAMHAS, who have entered into the Channel Distribution Agreement with Channel Distribution Partners, the services of Channel Carriage were provided by the Channel Distribution Partners to TV-NOVOSTI directly. Hence the services provided by the LAMHAS in this respect qualify as intermediary services . In the case of Verizon Delhi High Court has not considered the rule 2(f) and Rule 9 of Place of Provision of Services Rules, 2012, hence the said decision do not pronounce/ enunciate law in respect of the said rules. In our view the said decision of Delhi High Court too is distinguishable. C. Paul Merchants [2013 (29) ELT 257 (T-Del)] This decision also is in respect of the law as it existed prior to introd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other service or services.) Rule 9 of Place of Provision of Services Rules, 2012; The place of provision of following services shall be the location of the service provider. (a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders (b) Online information and database access or retrieval services; (c) Intermediary services; (d) Service consisting of hiring of all means of transport other than, - (i) Aircrafts, and (ii) Vessels except yachts, Up to a period of one month 9. The contention of Revenue is that the services proposed to be provided by the applicant are intermediary services as mentioned under Rule 9(c) of POPS. Intermediary is defined under Rule 2(f) of POPS as under; (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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. 12. It has been submitted by the applicant that services to be provided by the applicant are not peculiar only in applicant s case but are provided by various Indian entities to their overseas customers in India as a single package. Further, supporting the business of GoDaddy US in India is the main service and processing payments and oversight of services of third party Call Centers are ancillary and incidental to the provision of main service, i.e., business support service. Further, applicant would provide said services as a package and the payment for the entire package would be a consolidated lump sum payment. Applicant submits that in view of all these indicators, service provided by them to GoDaddy US is a bundle of services, which is bundled in normal course of business. This point has not been controverted by the Revenue. We agree with the submissions of the applicant that proposed services are a bundle of services, bundled in normal course of business and not intermediary service. The issue under consideration of the Authority was in respect of bundle of services, and on examination of the services provided that the bun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation board and samples for product testing. 7.2 I also find that the learned Commissioner (Appeals) has also analysed the various clauses of the agreement and has come to the conclusion that as per the agreement also appellant is engaged in providing project support services, consulting services, marketing on product, technical support services etc. to the foreign company. The learned Commissioner has also come to the conclusion on the basis of the relevant documents available on record that such services are rendered to the group company located outside India and the payment of such services is received by the appellant in convertible foreign exchange. Further the findings of both the authorities that the services rendered by the appellant fall under the definition of intermediary under Rule 2(f) of the Place of Provisions of Services Rules, 2012 and in terms of Rule 9 of the Place of Provision of Services Rules, 2012 specified vide Notification No. 28/2012, dated 20-6-2012 which is effective from 1-7-2012 in the case of intermediary service, place of provision of services shall be the location of the service provider and therefore the services ren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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