TMI Blog2023 (9) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices are not exigible to service tax being export of service. Thus, there are no reason to take a different view from the decision rendered in the case of M/s. Vodafone Cellular Ltd. Following the same, it is opined that the demand cannot sustain. As per (SANJIV SRIVASTAVA), MEMBER (TECHNICAL) HELD THAT:- The international roamer while roaming outside is home network gets hooked to the network which is available and with whom the home network has made necessary agreement for providing the roaming services. Every time the international roamer makes the call he is calling the available network and all calls made by him are only routed through the available network in the place where he is located. In actual the calling facility is provided to the international roamer by the available network only and not by his home network. Thus the actual service recipient i.e. international roamer is getting the services from the available network. All the literature suggests that in the case of international roaming the Home Service Provider is only acting as the facilitator for getting the service provided through the available network in the place where the roamer is located thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision is sub silentio for the period after 01.07.2012 and the appeal has to be dismissed, as held by the Member (Technical)? As per Per: Dr. D.M. MISRA, MEMBER (JUDICIAL) Whether, after notifying the POPS Rules, 2012, the FTO is no more to be considered as the service receiver and the person who visits India and beneficiary of the said roaming service becomes the service receiver? HELD THAT:- In the present case, the legal relationship is between the appellant and the overseas FTO for provision of the service, when their(FTO's) subscriber visits India and uses the services during his stay in India. The consideration/payment for the service flows from the FTO to the appellant, for the said service, under an agreement, even though the beneficiary for such service is subscriber of the FTO. Thus, the FTO is the person who is legally entitled to receive the service as per the agreement, even though the beneficiary is the customer of FTO on their visit to India. Therefore, in my view, there is no change of status of the FTO, from service receiver to an Intermediary, post introduction of POPS Rules, 2012, when read in the context of the charging section 66B - In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had not paid Service Tax on the international inbound roaming charges for the period from July 2012 to September 2013. On enquiry, the appellant informed that they have received income in foreign currency for rendering such services and that the services rendered by them qualify as 'export of services' in terms of the Export of Services Rules, 2005. According to the Department, the appellant charged an amount for 'international roaming' from their partner foreign network operators [for latter's customers while roaming in the taxable territory (India)]. Since these services were provided in India by the Indian service provider and consumed in the Indian taxable territory, the Department entertained a view that such services, in the nature of international inbound roaming services, are liable to Service Tax. 6. Show Cause Notice No. 36/2014-Commr. Dated 16.10.2014 was issued to the appellant for the period from July 2012 to September 2013 proposing to demand Service Tax on the international inbound roaming charges received by them, along with interest, and also for imposing penalties. After due process of law, the Original Authority vide order impugned h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2013 because the service recipient (inbound roamer) is located in India for the entire duration when the roaming services are rendered. That the service is provided within India to the inbound roamer as per Rule 3 of the Place of Provision of Services Rules, 2012 ('POPS Rules'). It is concluded by the Department that the activity cannot be treated as an export of service under Rule 6A of the Service Tax Rules, 1994 because the conditions in Rule 6A(d) of the Service Tax Rules are not satisfied as the place of provision of service is within India. 7.3 She submitted that the Tribunal in the appellant's own case for the very same set of facts and issue, as reported in M/S. Vodafone Cellular Ltd. v. Commissioner of G.S.T. and C.Ex., Coimbatore [2019 (25) G.S.T.L. 557 (Tribunal - Chennai)], has decided the issue in favour of the appellant and held that the activity amounts to export of service and therefore, not exigible to Service Tax. She submitted that an appeal has been preferred against such order before the Hon'ble Supreme Court as Civil Appeal bearing Diary No. 40710/2019 by the Department. That though notice has been issued, no interim stay has been grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d roaming services is in the nature of export of services. 7.6 She argued that all these facts have already been considered by the Tribunal in the appellant's own case and the Tribunal has set aside the demand for the earlier period as well as subsequent periods. That the present dispute, which pertains to the period from July 2012 to September 2013, is the period sandwiched between the periods of dispute in the earlier cases. 7.7 She prayed that the appeal may be allowed. 8. Smt. Sridevi Taritla, Learned Authorized Representative for the Revenue, supported the findings in the impugned order. 9. Heard both sides. 10. The facts have already been narrated in detail and we find that the very same issue has been considered by the Tribunal in the appellant's own case for a different period in the case of M/s. Vodafone Cellular Ltd. v. Commissioner of G.S.T. and C.Ex., Coimbatore [2019 (25) G.S.T.L. 557 (Tribunal - Chennai)] wherein the Tribunal has analysed the very same issue for the periods from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014, where the demand was raised on international inbound roaming services. For better appreciation, the relevant parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The international inbound roamer is not a subscriber of the appellants. The department has proceeded with the view that the actual beneficiary of the service is the inbound roamers and the appellant being a service provider for such international roaming facility, the service would fall within the levy of service tax. In fact, even though the actual beneficiary of the service is inbound roamer, there is no agreement by the appellant to provide service to the actual inbound roamer. The agreement to provide service is between the appellant and the foreign telecommunication company. Thus, for the appellant, the service recipient can only be the foreign telecommunication company and not the international inbound roamer. In case of any difficulty faced by the international inbound roamer he would call the customer care of the foreign telecom company to which he is a subscriber. Thus, as per the agreement, the appellant agrees to provide service to the foreign telecom company and therefore such foreign telecom company is the service recipient. 5.2 Since the service recipient is located outside India, as per Rule 3(iii) of Export of Service Rules, the said services would amount to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and superseded by the Master Circular. The relevant paragraph is extracted below:- 42. Circular No. 90/1/2007, dated 3rd January, 2007 concerned provision of telephony services to subscribers of international telephone service providers who may be on a visit to India and are availing the inbound roaming services. The said Circular clarified that a telephone connection did not necessarily mean providing a telephone instrument or providing sim card. Even if a number was allocated temporarily to an inbound roamer and used internally it remained a service of a telephone connection. It was clarified that during the period of roaming, the Indian Telecom service provides telephone service to an international inbound roamer. This service to an inbound roamer is delivered and consumed in India and, therefore, is not an export of service. 43. The said Circular dated 3rd January, 2017 did not deal with telecommunication services involving transfer of electronic data. Then came the Circular No. 96/7/2007-S.T., dated 23rd August, 2007. This was on the basis of the report of the Committee chaired by Shri T.R. Rustagi, former Commissioner of Customs Central Excise and Director Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd claim was filed by the appellant after paying service tax, the revisionary authority has granted the refund after considering all the circulars as well as the decision in the appellant s own case and the case of Verizon Communication India Pvt. Ltd. (supra). Paragraphs 15 and 16 of the said revisionary order makes it clear that the revisionary authority has taken note of all the circulars of the Board as well as the decisions relied upon by the appellant to grant the refund for the period prior to 1.4.2011. After 1.4.2011, appellant stopped paying the service tax for which show cause notices have been issued. It is clear from the order of Revisionary authority that when the appellant had paid service tax and filed refund claims on the very same services, the department has granted refund holding the services as export of services. The department has granted refund upto the period 31.3.2011. The department therefore cannot contend that the services are not export of services for the period from 1.4.2011 to 30.6.2012 and 1.10.2013 to 30.9.2014 which is the disputed periods in these appeals. 6. From the foregoing discussions, we are of the considered opinion that the services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of the Hon'ble High Court of Delhi in case of Verizon Communication 2017-TIOL-1863-HC-Del-ST, has concluded in para 5.5, that Master Circular has superseded the earlier Circulars and Circular 03.01.2007 cannot be applied. 1.2 Tribunal thereafter has referred to the order of Government of India, Order No order No. 01-05/2018-ST/ASRA/Mumbai dated 23.1.2018, whereby the Government has allowed the refund/ rebate claims filed for the period prior to 01.04.2011, as they were paying service tax on the said services provided by them till 01.04.2011. However the order itself records that the appellant had stopped paying the service tax after 01.04.2011. 1.3 Commissioner has in the impugned order, observed as follows, for holding that the services provided by the appellant have been provided by the appellant to the service recipients within the taxable territory: 9. I have given my earnest consideration to the issues agitated in the notice as well as the counter arguments presented by Vodafone. I find that the entire notice is an upshot of difference in understanding between the department and Vodafone on who the recipient of service is. At the cost of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above notification (emphasized above in bold) prove that the Service Tax law considers the inbound roamer not the foreign telecom operator - as the service recipient. The notification had waived the non-collection of tax for the period up to 14-01-2007 only. This aspect has been clarified by the CBEC in its Circular No. 90/1/2007-S.T. dated 03-01-2007, wherein it was noted that: During international roaming, the visiting network provides service to a person treating him as a subscriber on a temporary basis for the period during which service is availed of by such person from the visited network. The only difference is that the payment is not directly received from the subscriber, but the same is routed through the home network. However, this does not alter the essential characteristics of the service, which is of a telephone connection. As regards the argument that no telephone connection Therefore, during the period of roaming, the Indian telecom service provider provides telephone service to an international in-bound roamer. This service to inbound roamers is delivered and consumed in India and, therefore, it is not an export of service. International practice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs / input services used in providing services which are exported. Hence, I hold that Rule 6A of the Service Tax Rules, 1994 does not provide any relief to Vodafone in the present proceedings. 1.4 The finding of the Commissioner to that effect have not been considered and set aside by any authority. The finding of fact rendered by the Commissioner in respect of the manner of provision of the services clearly indicate that inland roaming services to the customer of the MTO located elsewhere, are provided through unique identification number assigned to the customer of the MTO located elsewhere without even assessing the network of the MTO located elsewhere shows that the customer of MTO is the recipient of service and is located in India. It is only the billing for the services so rendered that MTO, comes into picture, and is nothing but an intermediary in the provision of services. To understand the manner of provision of inland roaming services by the telecom operator's reference is made to the technical literature available on the internet. For this purpose the information as available on the web page https://www.tutorialspoint.com/telecom-billing/roaming-billing.htm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed outbound roamer. What is TAP3? Transferred Account Procedure version 3 (TAP3) is the process that allows a visited network operator (VPMN) to send billing records of roaming subscribers to their respective home network operator (HPMN). TAP3 is the latest version of the standard and will enable billing for a host of new services that networks intend to offer their customers. Clearing house uses TAP3 protocol to exchange all the CDRs between different roaming partners. TAP3 defines how and what information on roamed usage must be passed between Network Operators. These files are exchanged using simple FTP connection. There are different versions of TAP. TAP evolved from TAPI through TAP2 and TAP2+ to TAP3. The latest release, TAP3, includes support for inter-standard roaming in a satellite network, WLAN and UMTS and other 3G technologies. GSM TAP Standard TD.57 - GSM Transferred Account Procedure (TAP) defines the format and validation rules for transferring roaming usage information between mobile operators in different countries. TAP3 is the third specification version of the standard. The files transferred are termed TAP files. GSM RAP Standard TD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber, and data services while in another country. This seamless extension of coverage is enabled by a wholesale roaming agreement between a roaming customer's home operator and the visited network in the visited country, which addresses the technical and commercial components required to enable the service. IMR is one service offered to consumers within a wider market of communications services while travelling abroad. The selection of communication services while travelling includes hotel services, public / private WiFi, single SIM multiple number products, national travel SIMS, and visited operator SIMs, amongst others. This paper does not directly address these other services. However, these other services need to be recognised as a part of any more robust analysis of the market for communication services while travelling abroad. 3. How does IMR work? A large number of commercial and technical elements are required to support IMR. The following diagram illustrates how the key elements come together. The illustration is based on the scenario where you (on the left hand of the diagram) are roaming abroad, and you make a call to your friend (on the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile you are roaming. 3. The Visited Operator A sends Transferred Account Procedure (TAP) files to a Clearing House which forwards them to your Home Operator. TAP files are used for billing of calls while roaming. 4. Your Home Operator can then pay Visited Operator A wholesale charges as per call volumes in the TAP file and rates in the wholesale roaming agreement. 5. Visited Operator A pays the International Carrier for carrying the call and handing over the call to your Home Operator. The International Carrier in turn pays your Home Operator a termination rate for terminating the call in your home country. 1.6 Further in the presentation titled Telecom Roaming Overview available on https://www.slideshare.net/Shilpin-2014/telecomroaming-overview, assessed on 25.08.2022 the presenter explains the concept of international roaming by way of illustrative diagrams which are depicted below: 1.7. From the perusal of each of scenario it is observed that the international roamer while roaming outside is home network gets hooked to the network which is available and with whom the home network has made necessary agreement for providing the roaming servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the Place of Provision of Service Rules, 2012 and Education Guide 2012 issued explaining the said provision. The decision relied upon by the Appellant and Hon'ble Member (Judicial) in her order has been passed without consideration of the facts and the provisions of law on the subject hence being sub-silentio cannot be a binding precedent for the present case. 1.11 The relevant excerpts from the Education Guide are reproduced below: 5.1 Introduction 5.1.1 What is the relevance of the 'Place of Provision of Services Rules, 2012'? The 'Place of Provision of Services Rules, 2012' specify the manner to determine the taxing jurisdiction for a service. Hitherto, the task of identifying the taxing jurisdiction was largely limited in the context of import or export of services. For this purpose rules were formulated which handled the subject of place of provision of services somewhat indirectly, confining to define the circumstances in which a provision of service would constitute import or export. The new rules will, on the other hand, determine the place where a service shall be deemed to be provided, in terms of section 66C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a common practice to largely tax services provided by business to other business entities, based on the location of the customers and other services from business to consumers based on the location of the service provider. Since the determination in terms of above principle is not easy, or sometimes not practicable, nearest proxies are adopted to provide specificity in the interpretation as well as application of the law. 5.2 Basic Framework 5.2.1 How will a person determine the taxability of a service in terms of these rules? As stated earlier, in terms of section 66B, a service is taxable only when, inter alia, it is provided (or agreed to be provided) in the taxable territory . Thus, the taxability of a service will be determined based on the place of its provision. For determining the taxability of a service, therefore, one needs to ask the following questions sequentially:- 1. Which rule applies to the service provided specifically? In case more than one rules apply equally, which of these come later in the order given in the rules? 2. What is the place of provision of the service in terms of the above rule? 3. Is the place of provision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility will be discharged by ABC, being the service provider and being located in taxable territory. However, if ABC were to supply the same service to a recipient DEF located in non-taxable territory, the provision of such service is not taxable, since the receiver is located outside the taxable territory. If the same service were to be provided to PQR (located in taxable territory) by an overseas provider XYZ (located in non-taxable territory), the service would be taxable, since the recipient is located in the taxable territory. However, since the service provider is located in a non-taxable territory, the tax liability would be discharged by the receiver, under the reverse charge principle (also referred to as tax shift ). 5.3.3 Who is the service receiver? Normally, the person who is legally entitled to receive a service and, therefore, obliged to make payment, is the receiver of a service, whether or not he actually makes the payment or someone else makes the payment on his behalf. Illustration : A lady leaves her car at a service station for the purpose of servicing. She asks her chauffer to collect the car from the service station later in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in terms of proviso to section 66B, the establishments in a taxable and non-taxable territory are to be treated as distinct persons. Moreover, the definition of location of the receiver clearly states that where the services are used at more than one establishment, whether business or fixed, the establishment most directly concerned with the use of the service will be the location. Thus, the taxing jurisdiction of service, which is provided under a 'global framework agreement' between two multinational companies with the business establishment located outside the taxable territory, but which is used or consumed by a fixed establishment located in the taxable territory, will be the taxable territory. Illustration The following example illustrates the above, by comparing the place of provision of services rendered under a Global Agreement (A 'Global Contract or Agreement' is between two parent companies for provision of services from one to the other, where actual provision of services is to be made to subordinate offices of the recipient company in different tax jurisdictions.) vis- -vis a Global Framework Agreement (A 'Globa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for the whole group. The Framework agreement covers the broad contours of supply between the two parties, payment milestones, obligations relating to confidentiality, penalty for default, limitations of liability and warranties etc, which would apply as and when group companies enter into separate agreements, in accordance with the terms envisaged in the framework agreement. BBB-X and BBB-Y could then enter into separate and independent business agreements with AAA-X and AAA-Y, in countries X and Y respectively, for provision of IT services. There are four agreements, but only three transactions involving provision of services, as indicated in the Flow diagram F3- Scenario 2 at the end of this section. 1.12 From the facts of the case and application of the Place of Provision of Service Rules, 2012, as explained by the Education Guide, as above, in the present case the service recipient being located in India, the place of location of service recipient will be the place of provision of service, though the payment for the service received by the international roamer is made by his Home Network to service provider. Illustrations at 5.3.3 and 5.3.4 make the issue clear without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own case referred to by the Learned Member (Judicial) a part of demand period is after 01.07.2012, and Tribunal has made observation for that period in para 5.2, which in my view is sub-silentio and hence cannot be a binding precedent. In view of the findings as above the appeal needs to be dismissed. (Sanjiv Srivastava) Member (Technical) 1. I have perused the separate order recorded by Learned Brother Member (Technical) Shri Sanjiv Srivastava. It would not be proper if I do not state that the materials on which Learned Brother Member (Technical) has placed reliance, as noted by him from paragraph 1.4 onwards, so as to record the difference of opinion, was not argued by either of the parties and I did not have the opportunity to get myself clarified on the observations made. I have had the privilege of seeing the same only while perusing the separate order recorded by my Learned Brother. DIFFERENCE OF OPINION 2. In view of the difference of opinion between the Members, the following questions are framed for resolution of the same, as under:- (1) Whether the decision of the Tribunal in the appellant's own case on the same issue which covers the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of Service Rules, 2012 (POPS Rules, 2012, for short), was of the opinion that the judgment delivered earlier in the context of provisions prevailing the then would not be applicable to post-amendment era. He has further reasoned that the illustration provided in para 5.3.3 and 5.3.4 of the Education Guide in particular, and Rule 8 9 of POPS Rules, 2012, if considered, then the location of the receiver of service i.e. the international roamer, who avail the facility by consuming the services while on his visit to India irrespective of payment for such services by the FTO, who is an intermediary for payment of the consideration, being in the taxable territory of India, hence service tax is applicable to such services. 5. In the earlier judgement of the Tribunal in the appellant's own case, even though the period covered post-01.07.2012, but a finding has been recorded mentioning that the view taken consistently by the Tribunal in the appellant's own case from time to time will also be applicable for the period after 01.07.2012. In the earlier order of the Tribunal reported at 2019(25) GSTL 557 (Tri. Chennai), at para 5.2, it is observed as follows:- 5.2 Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. By virtue of Section 66C of the Finance Act, 1994 the POPS Rules, 2012 has been notified. The said Section 66C reads as follows:- 66C. Determination of place of provision of service :-- (1) The Central Government may, having regard to the nature and description of various services, by rules made in this regard, determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory. 8. The Place of Provision of Service Rules notified vide Notification No. 28/2012-ST cit. 20.06.2012 to ascertain the location of service provider as well as service receiver mostly for determination of tax liability of the international transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomer, the service recipient is your customer and not the third party. For example, when a florist delivers a bouquet on your request to your friend for which you make the payment, as far as the florist is concerned you are the customer and not your friend. (emphasis supplied) 10. The question now needs to be answered is: whether, after notifying the POPS Rules, 2012, the FTO is no more to be considered as the service receiver and the person who visits India and beneficiary of the said roaming service becomes the service receiver. The relevant POPS Rules, 2012 referred in the Order i.e. Rule 3, 8, and 9 read as: RULE 3. Place of provision generally . The place of provision of a service shall be the location of the recipient of service . Provided that in case [of services other than online information and database access or retrieval services, where] the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service. *********************************************** RULE 8. Place of provision of services where provider and recipient are located in taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r servicing; later when her chauffer collects the serviced car after making payment on behalf of the lady, cannot be called the service receiver. Undoubtedly, the service receiver is the lady; not the chauffer, who makes the payment, for the simple reason that she is the person legally entitled to receive the service. In other words, the decisive factor, is the agreement between the service station and the lady for servicing the car, under which she is obliged to make the payment in consideration of the service received. The mode/medium of payment of the obliged amount may be through the Chauffer. Thus, the illustration makes it clear, to identify the service receiver, who makes the payment for the service, is a factor immaterial, but who is legally obliged to make the payment, in pursuance to the agreement for rendition of the service, is the decisive factor. Examining the issue other way round, legally, if any deficiency in the service of the car, the lady can proceed against the service provider and not the chauffer who has made the payment on behalf of the lady, while taking delivery of the car. In the present case, it is the agreement between the appellant and the FTO; hence a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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