Custom, Excise & Service Tax Tribunal
Ebay India Pvt. Ltd vs Mumbai Ii on 22 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/252/2011
[Arising out of Order-in-Appeal No: RBT/115/2010 dated 27/12/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
For approval and signature:
Honble Shri M V Ravindran, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
eBay India Pvt. Ltd.
Appellant
Vs
Commissioner of Service Tax
Mumbai II
Respondent
Appearance:
Shri S. Thirumalai, Advocate for the appellant Ms. P.V. Sekhar, Dy. Commissioner (AR) for the respondent CORAM:
Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 22/07/2015 Date of decision: 22/07/2015 ORDER NO: ____________________________ Per: M V Ravindran:
This appeal is directed against the Order-in-Appeal No: RBT/115/2010 dated 27/12/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.
2. The relevant facts that arise for consideration are, the appellant filed refund claims of ?32,57,539/- for the amount taken as CENVAT credit on the input services which were, according to the appellant, utilized for the export of service. Subsequently find that there could be an error, they revised the refund claim to ?23,59,331/- and claimed that the services rendered by them as per agreement was to M/s. eBay International, situated in Switzerland. The lower authorities issued a show cause notice dated 17/07/2007 proposing to reject the said refund claim. Appellant contested the said show cause notice on merits and during the personal hearing before the adjudicating authority, they claimed that the services rendered by them to M/s. eBay International, Switzerland was covered under the category of Business Auxiliary Services and they are eligible for the refund of the service tax paid on the input services. The adjudicating authority after following due process of law, came to the conclusion that the services rendered by the appellant get appropriately classified under Business Support Services which came into effect from 01/05/2006 and accordingly for the period in question the refund claim is ineligible to be granted as the Business Support Service was not a taxable service. Being aggrieved by the said decision, appellant preferred an appeal before the first appellate authority and the first appellate authority also concurred with the views of the adjudicating authority and rejected the appeal.
3. Learned Sr. Advocate appearing on behalf of the appellant would take us through the agreement entered into between the appellant and eBay International, Switzerland. After explaining us the ingredients of the said agreement, he would submit that the lower authorities have mis-directed themselves in holding that the services rendered by the appellant would not fall under the category of Business Auxiliary Services during the relevant period. He would submit that the finding of the first appellate authority are clearly indicative that the services rendered by the appellant would fall under Business Auxiliary Services and he would gainfully refer to the CBEC Circular No. 59/8/2003 dated 20/06/2003, specifically paragraph No. 2.1.3, first bullet point. He would also point out that the dispute as to the fact that the services which are rendered by them to eBay International, Switzerland are paid in the form of cost plus mark up of 8%. He would also draw our attention to the provisions of Section 65A of the Finance Act, 1994 which provides for classification of the services in different situation and even if provisions of Section 65A are followed the services rendered by the appellant would fall under the category of Business Auxiliary Services.
4. Learned Departmental Representative, on the other hand, draws our attention to the very same agreement entered into by the appellant with eBay International, Switzerland. It is his submission that the relationship between the appellant and eBay International, Switzerland is not very clear as to what kind of services are rendered by the appellant to eBay International, Switzerland. It is his submission that the services rendered by the appellant would appropriately fall under Business Support Services for the purpose of which he refers to the impugned order and submit that the services rendered by the appellant are mostly in respect of legal requirements relating to the business and provide market data relating to the industry. It is their submission that the prioritization of the services rendered itself would indicate that the appellant is not undertaking any marketing or promotional activities for eBay International, Switzerland.
5. Learned counsel would also submit that the honble High Court of Karnataka, in more or less similar situation, in the case of mPortal (India) Wireless Solutions Pvt. Ltd. vs. Commissioner of Service Tax, Bangalore 2011-TIOL-928-HC-KAR-ST has held that even if the services are not taxable services, CENVAT credit on the input services can be availed. It is his submission that if this ratio is applied CENVAT credit availed by the appellant on the input services has to be refunded as per the provisions of Rule 5 of the CENVAT Credit Rules, 2004.
6. We have carefully considered the submissions made by the both the sides and perused the records.
7. The undisputed facts are that the appellant here is a STPI unit registered with the authorities. They are rendering services to eBay International, Switzerland by getting services, which are input services from various service providers and paying service tax to such service providers. The appellant had filed refund claims for refund of the input services which has been paid by them to the service providers.
8. We find that the impugned order upholding the rejection of the refund claim is unsustainable for more than one reason. Firstly, the finding that the first appellate authority as regards services rendered by the appellant are reproduced below:
I have gone through scope of service provided by the appellant, definition of Business Auxiliary Service and Business Support Service and provisions relating to classification of services as discussed above. I find that the various services provided by the appellant falls under Business Auxiliary Services as well as Business Support Services as below. The services are as per clause 3.1of the agreement dated 17.3.2005:-
9. Scope of service as per agreement Classification a. Suggest to eBay International, all pertinent legal requirements relating to business for the service provider territory;
Business Support Service b. Provide market data relating to industry; Business Support Service
c. Provide marketing and promotional services within the service provider territory as directed by eBay International;
Business Auxiliary Service Sub-clause (ii) d. Perform payment processing and collection activities related to eBay International's business in the service provider territory, including lock box service;
Business Support Service e. On direction from eBay International, prepares and discuss budgets or other similar matters relating to the service provider territory and provide market data, as may from time to time be requested by ebay International;
Business Support Service f. Perform local customer support activities as specified by eBay International;
Business Auxiliary Service Sub-clause (iii) g. Furnish such reports and information relating to its activities as may be requested from time to time by ebay International during term of this aqreement;
Business Support Service h. Such other administrative and support activities as eBay International shall request Business Support Service From the above it is dear that the appellant is rendering the service of evaluating prospective customers, processing of orders, customer management, processing of transactions, information and tracking schedule operational assistance for marketing, formulation of customer services and other co-ordination services in India.
10. It can be seen from the above reproduced findings that the appellate authority has come to the conclusion that the services rendered by the appellant were in respect of evaluating prospective customers, processing of orders, etc. We find that CBEC vide circular No. 59/8/2003 dated 20/06/2003 at paragraph 2.1.3 first bullet point has clarified as under:
2.1.3 Certain doubts have been raised in case of business auxiliary services. In this regard the following is clarified,-
* While it is not possible to give an exhaustive list of business auxiliary services, the following are illustrations of services that are covered under this category viz. evaluation of prospective customers, processing of purchase orders, customer management, information and tracking of delivery schedules, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, managing distribution & logistics. The services provided in relation to getting a customer, verification of prospective customer, processing of purchase order etc would also be covered under service tax, as the law specifically provides for inclusion of such services as business auxiliary support services.
11. It can be seen from the above reproduced clarification of the Central Board of Excise & Customs, the activities as undertaken by the appellant would be classifiable under Business Auxiliary Services. Such clarification of the Board was applicable to the period under dispute as the period under dispute is prior to 01/05/2006. We would like to state that this clarification was binding on the first appellate authority and should have followed the same which is a settled law. Secondly, we do find strong force in the contention raised by the counsel that even going by the provisions of Section 65A of the Finance Act, 1994 the classification of the services as rendered by the appellant would be covered under Section 65A (2) (c) which indicates that if a services cannot be classified in any of the manner specified in clause (a) or clause (b) it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merits consideration, which in this case is the Business Auxiliary Services. Thirdly, we find that the honble High Court of Karnataka in the case of mPortal (India) Wireless Solutions Pvt. Ltd. (supra) in paragraph 6 has held has under:
6. The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of ` 4,36,985/- is accumulated cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the cenvat credit. The assessee is entitled to the refund of the cenvat credit. Similarly insofar as refund of cenvat credit is concerned, the limitation under Section 11B does not apply for refund of accumulated cenvat credit. Therefore, bar of limitation cannot be a ground to refuse cenvat credit to the assesee.
12. In the case of mPortal (supra) the issue was whether mPortal being a STPI registered unit can avail the CENVAT credit of the input services received by them. The ratio of the honble High Court would be applicable in the case in hand, as in this case also the appellant is registered under STPI.
13. In view of the foregoing, in the facts and circumstances of this case, we find that the impugned order is unsustainable. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Dictated in Court) (C J Mathew) Member (Technical) (M V Ravindran) Member (Judicial) */as 9