Custom, Excise & Service Tax Tribunal
Principal Commissioner Cgst-Noida vs Adobe Systems India Private Limited on 25 September, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70009 of 2020
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1526 TO 1528-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Customs & Central Tax,
Noida)
Commissioner of Central Goods &
Service Tax, Noida .....Appellant
(C-56/42, Sector-62, Noida)
VERSUS
M/s Adobe Systems India Pvt. Ltd., ....Respondent
(A-1, City Centre, Sector 25A, Noida) WITH Service Tax Appeal No.70712 of 2024 (Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1526 TO 1528-17-18 dated 29/12/2017 passed by Commissioner (Appeals) Customs & Central Tax, Noida) Commissioner of Central Goods & Service Tax, Noida .....Appellant (C-56/42, Sector-62, Noida) VERSUS M/s Adobe Systems India Pvt. Ltd., ....Respondent (A-1, City Centre, Sector 25A, Noida) AND Service Tax Appeal No.70713 of 2024 (Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1526 TO 1528-17-18 dated 29/12/2017 passed by Commissioner (Appeals) Customs & Central Tax, Noida) Commissioner of Central Goods & Service Tax, Noida .....Appellant (C-56/42, Sector-62, Noida) VERSUS M/s Adobe Systems India Pvt. Ltd., ....Respondent (A-1, City Centre, Sector 25A, Noida) APPEARANCE:
SMT Chitra Srivastava, Authorised Representative for the Appellant Shri Nikhil Gupta, Advocate for the Respondents CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Service Tax Appeal No.70009 of 2020 &
2 Service Tax Appeal No.70712-70713 of 2024 FINAL ORDER NOs.70873-70875/2024 DATE OF HEARING : 25 September, 2024 DATE OF DECISION : 25 September, 2024 SANJIV SRIVASTAVA:
These appeals filed by the revenue are directed against Order-in-Appeal No.NOI-EXCUS-001-APP-1526 TO 1528-17-18 dated 29/12/2017 passed by Commissioner (Appeals) Customs & Central Tax, Noida. By the impugned order Commissioner (Appeals) has set aside the order of the Original Authority rejecting the refund claims filed by the respondents under Section 11B of the Act.
2.1 Respondent is registered with the Department for providing taxable services under the category of Information Technology Services, Business Auxiliary Services and Management Consultant Service.
2.2 Respondent filed refund claims as per the table below:-
Sl. Refund claim Amount
Period involved SCN Date
No. Date (Rs.)
March'15 to
1 17.03.2016 6,03,98,872/- 27.05.2016
Sep'15
2 21.03.2016 2,84,84,069/- Oct'14 to Feb'15 27.05.2016
3 29.09.2016 6,98,16,511/- Oct'15 to Mar'16 20.10.2016
2.3 Above stated show cause notices were adjudicated by the
Original Authority by rejecting the refund claims filed by the respondent. As per the Order-in-Original, it was observed that the said refund claims would not be admissible for the following reasons:-
"4 The rebate on Exports made on services under service tax is no longer. available w. e. f. 01.07.2012. The provisions of Section 11-B(2)(d) provides that as per doctrine of unjust enrichment the assessee cannot claim a refund of tax paid in excess or unduly, paid if the tax is Service Tax Appeal No.70009 of 2020 &
3 Service Tax Appeal No.70712-70713 of 2024 collected or incidence of duty has been passed on to another person by the provider of the service. In the impugned refund claim, the party has already collected the service 'tax from the recipient of service, namely "Adobe Ireland" therefore refund is hit by bar of unjust enrichment.
5. Since the rebate on Exports made on services under service tax is no longer available rebate on Expo 2012 as notification regarding the rebate is not available for the benefit of exporters and alternate provisions vide various notifications have made, the party also cannot take shelter under the provisions governing rebate of duty thereby escaping the doctrine of unjust enrichment." 2.4 Aggrieved respondent filed appeals before Commissioner (Appeals) as detailed in following table, which has been allowed in favour of the respondent:-
Sl.No. Appeal No. Order-in-Original Amount of refund rejected (Rs.) 1 90/NOI/SVTAX/000/APPL- R-20/ST/D-II/N/16-17 6,03,98,872/-
I/16 dated 29.09.2016. dated 25.07.2016. 2 91/NOI/SVTAX/0G00/APPL- 'R-21/ST/D-II/N/16- 2,84,84,069/-
I/16 dated 29.09.2016. 17 dated 25.07.2016 3 164/NO1/SVTAX/000/APPL- R-41/ST/D-I[/N/16- 6,98,16,511/-
1/16 dated 17.03.2017. 17 dated 28.12.2016.
2.5 Aggrieved revenue have filed these appeals on the following grounds:-
"B1. The Commissioner (Appeals) has erred in holding that the party is eligible for grant of refund whereas the party has filed the refund/rebate claim under the provisions of Rule 6A of the Service Tax Rules, 1994, and as per the said rule the rebate on exports of services under service tax is no longer available w. e. f. 01.07.2012 as Notification regarding the rebate is not available for the benefit of such exporters and alternate provisions vide various notifications have been made. The rebate/refund has been claimed/ filed under the provisions of Rule 6A of the Service Tax Rules, 1994. Sub rule (2) of the said Rule 6A of the Service Tax Rules, 1994 stipulates that "where Service Tax Appeal No.70009 of 2020 & 4 Service Tax Appeal No.70712-70713 of 2024 any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions, and limitations, as may be specified, by the Central Government, by notification". Accordingly, the Board has issued Notification No. 39/2012 dated 20.06.2012, which is reproduced below: -
"In exercise of the powers conferred by rule 6A of the Service Tax Rules, 1994 (hereinafter referred to as the said rules), the Central Government hereby directs that there shall be granted rebate of the whole of the duty paid on excisable inputs or the whole of the service tax and cess paid on all input services (herein after referred to as 'input services'), used in providing service exported in terms of rule 6A of the said rules, to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedures specified hereinafter, - B2. Conditions and limitations:-
a) that the service has been exported in terms of rule 6A of the said rules;
b) that the duty on the inputs, rebate of which has been claimed, has been paid to the supplier;
c) that the service tax and cess, rebate of which has been claimed, have been paid on the input services to the provider of service;
Provided if the person is himselfi s liable to pay for any input services; he should have paid the service tax and cess to the Central Government.
d) the total amount of rebate of duty, service tax and cess admissible is not less than one thousand rupees;
e) no CENVAT credit has been availed of on inputs and input services on which rebate has been claimed;
and
Service Tax Appeal No.70009 of 2020 &
5 Service Tax Appeal No.70712-70713 of 2024
f) that in case,-
(i) the duty or, as the case may be, service tax and
cess, rebate of which has been claimed, has not been paid; or
(ii) the service, rebate for which has been claimed, has not been exported; or
(iii) CENVAT credit has been availed on inputs and input services on which rebate has been claimed, the rebate paid, if any, shall be recoverable with interest i n accordance with the provisions of section 73 and section 75 of the Finance Act, 1994 (32 of 1994)". B3. The said Rule 6A of the Service Tax Rules only provides for grant of rebate of service tax or duty paid on input services or inpuis, as the case may be, so used in providing such services which are exported. It does not cover rebate of output taxes i.e. of service tax paid in respect of the services so exported. Factually, rebate of output taxes i.e. service tax paid in respect of export of services is no longer available w.e.f, 01.07.2012. Thus, the claim of the said party is squarely not covered under the provisions of Rule 6A ibid. The Commissioner (Appeals) in the impugned Order-in-Appeals has erred in holding that the rebate is available for output tax.
B4. Further, the place of provisions in this case is India, as per rule 9 of Place of Provision of Services Rules, 2012 mentioned below:
"9, Place of provision of specified services.- 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)" ###*%" omitted vide Notification 46/2016- Serice Tax
(c) Intermediary services;
Service Tax Appeal No.70009 of 2020 & 6 Service Tax Appeal No.70712-70713 of 2024
(d) Service consisting of hiring of means of transport other than, -
(i) aircrafts, and
(ii) vesséls except yachts upto a period of one months]"
As per rule 2 of Place of provision of Services Rules, 2512 "intermediary"" means:
" (f) "intermediary" means a broker, an agent or any other person, by whatever same called, who arranges or facilitates a provision of a service (hereinafter called the „'main‟ service) or a supply of goods, between two or more persons, but does not include a person who provides the main service on his account.;"
B5. Moreover, a plain reading of the 2nd and 3¢ paragraphs of the "Adobe Systems Software Ireland Limited Services Agreement" reveal that the said support services were rendered by M/s Adobe Systems India Pvt. Limited to M/s Adobe Systems Software Ireland Limited within the territory of India. This will be revealed from the excerpts of the said para 2 and 3, cited herein below: -
"Whereas Adobe Ireland wishes to market, distribute and support certain software products it licences from Adobe Systems International POTLRETSTID, ............................................ throughout India (the "India Territories‟) and, Whereas Adobe Ireland desires to appoint Adobe India as its representatives and to delegate to Adobe India the performance of certain of its duties to its distributors in connection with pre-sales, as well as marketing and training services related to the India Territories market and Adobe India desires to perform such duties".
Thus, it becomes abundantly evident that the said Business Support Services were rendered by M/s Adobe Systems India Pvt. Limited to M/s Adobe Systems Software Service Tax Appeal No.70009 of 2020 & 7 Service Tax Appeal No.70712-70713 of 2024 Ireland Limited within the territory of India and thus as per the provisions of Place of Provision of Services Rules, 2012, the said party i.e. M/s Adobe Systems India Pvt. Limited was statutorily required to pay the due amount of service tax in respect of the services which they had rendered within the Indian Territory. By just projecting the fact that the other company is based in Ireland, the said party has willfully distorted the facts so as to make the subject case appear like export of services, whereas the said services were rendered within the Indian Territory and This is settled law that the rebate on Exports made on services under service tax is no longer available w.e.f. 01.07.2012. Further, the provisions of Section 11B(2)(d) (B> clearly provides that as per doctrine of unjust enrichment the assessee cannot claim arefund of tax paid in excess or unduly paid „if the tax is collected or incidence of duty has been passed on to another person by the provider of the service. In the present case, the party has already collected the service tax from the recipient of service, namely "Adobe Ireland" therefore refund is hit by bar of unjust enrichment. The party also cannot take shelter under the provisions governing rebate of duty thereby escaping the doctrine of unjust enrichment. On perusal of the invoices issued by M/s Adobe Systems India Private Limited, I-14, City Centre, Sector-254, Noida to its buyer i.e. M/s Adobe Systems Software Ireland Limited, Unit No. 3100, Ireland, it has been observed that they mentioned Service Tax @12.36% on the service value and collected the due Service Tax from their buyer as they received full amount from their buyer.
B6. The claim filed by the party and decided vide Order-in- Original No. R-21/ST/D-]I/N/16-17 dated 25.07.2016, it is observed that the claim was filed on 21.03.2016, for export of services during the period October-2014 to February' 2015, however, the prescribed time limit of one Service Tax Appeal No.70009 of 2020 & 8 Service Tax Appeal No.70712-70713 of 2024 year from the relevant date as prescribed under Section 11B of Central Excise Act as applicable to Service tax matter also was already expired well before 21.03.2016. The time limit prescribed in the Act is maximum time limit and it cannot be extended by any authority. Therefore, the claim filed by the party is time barred and liable to be rejected on this ground only. This issue of limitation in filing of the claim has neither been replied by the party, nor discussed anywhere by the appellate authority in the impugned Orders-in-Appeal.
B7. The bunching of appeals against the Orders-in-Original by the Commissioner (Appeals) is not proper and legal as, in appeals No. 90/NOI/SVTAX/000/APPL-1/16 dated 29.09.2016, 91/NOI/SVTAX/000/APPL-1/16 dated 29.09.2016 and 164/NOI/SVTAX/000/APPL-1/16 dated 17.03.2017 against Order-in-Original No. R- 20/ ST/D- 1I/N/16-17 dated 25.07.2016, R-21/ST/D-II/N/16-17 dated 25.07.2016 and R-41/ST/D-1I/N/16-17 dated 28.12.2016 respectively. The issue of time bar was also involved in respect of Order-in-Original No. 21/ST/D- 11/N/16-17 dated 25.07.2016, whereas the said issue was not involved in the Order-in-Original No. R-20/ST/D- 11/N/16-17 dated 25.07.2016 and R-41/ST/D-I[/N/16-17 dated 28.12.2016. In this regard the observations of the CESTAT Mumbai in pares 6,9 of the order in case of M/s Hindalco Industries limited Vs CCE Belapur Mumbai-Iil & Nagpur. 2014(4) ECS(115)(Tri-Mum) is of great significance which is reproduced below:-
Para 6.9- It is settled position in law as held by the Hon'ble Apex Court in Al Noori Tobacco Products India Limited case [2004(170)ELT-175 (SC}] that the ratio of decision can be applied only if the facts are identical. A slight or a material change in the facts could leave to an entirely different conclusion.
Service Tax Appeal No.70009 of 2020 & 9 Service Tax Appeal No.70712-70713 of 2024 In the said case the Hon'ble Apex Court noted as follows:-
" There is always peril in treating the words of a speech or Judgement as though they are words in legislative enactment, and is to be remembered that Judicial utterances made in the setting of the facts of a particular case."
Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. The following words Lord Denning in the matter of applying precedents have become locus classicus :
"Each case depended on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases by matching the color of one case against the color of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive."
B8. Commissioner (Appeals) in para 4.18 of the impugned Order in Appeals in discussion & findings part has himself observed that just because there is no notification to claim refund of service tax paid on export of services, does not mean that the benefit of refund of service tax paid on export of services should be denied. This observation in itself proves that there is no such notification available w.e.f. 01.07.2012.
B9. The above Order in Appeals, earlier on receipt, was not found to be proper and legal, hence considering the matter involved as rebate of service tax a Revision Application was preferred by the department with the Revisionary Authority, Govt. Of India, within due date, under Section 35EE of the Central Excise Act,1944 read with Section 83 Service Tax Appeal No.70009 of 2020 & 10 Service Tax Appeal No.70712-70713 of 2024 of the Finance Act,1994. The Revisionary Authority (R.A) vide Order No.67/2018-ST dated 06.12.2018 (F.N0.199/01/ST/2018-R.A.) decided the matter by holding that the issue involved is refund of service tax and not rebate of service tax and consequently rejected the revision application as non-maintainable due to lack of jurisdiction. The above order of the R.A. was not received in this office. After request from the Commissionerate the certified copy of the above order was received in the Commissionerate on 21.11.2019. In light of the decision of the of the R.A. holding that the matter pertains to refund and not rebate, an appeal against the impugned Order in Appeals is proposed to be filed with Hon‟ble CESTAT, Allahabad.
In view of above mentioned submissions and various referred case laws, it appears that the Order-in-Appeal No. NOI-EXCUS-001-APP-1526 to 1528-17-18 dated 29.12.2017 passed by the Commissioner (Appeals), Customs & Central Excise, Noida, is not legal and proper and is warranted to be set aside.
Now, therefore, in exercise of the powers vested under Section 86(2A) of the Chapter V of the Finance Act, 1994 in the Committee of the Principal Commissioner, Central Excise and Service Tax, Noida and Commissioner, Central Excise and Service Tax, Gautam Budh Nagar, constituted vide Board Order No. 04/2017-CX&ST dated 13.07.2017 issued by the (Judicial & Review Cell) C.B.E.C, New Delhi, under F.No.390/Review/36/2014-JC, under Sub-Section (1B) of the Section 35-B of the Central Excises act, 1944, we hereby authorize the Deputy/ Assistant Commissioner, Central Tax, Division-I, Noida to file an appeal on behalf of the committee along-with the COD application, to the Customs, Central Excise & Service Tax Appellate Tribunal, Regional Branch-Allahabad (U.P.) against the impugned Order-in-Appeal No. NOIEXCUS-001- APP-1526 to 1528-17-18 dated 29.12.2017. The Order-in-
Service Tax Appeal No.70009 of 2020 & 11 Service Tax Appeal No.70712-70713 of 2024 Appeal No.NOI-EXCUS-001-APP-1526 to 1528-17-18 dated 29.12.2017 was received in the office of the Principal Commissioner of Central Tax, Noida on 06.02.2018." 3.1 We have heard Smt Chitra Srvastava learned Authorised Representative appearing for the revenue and Shri Nikhil Gupta learned Counsel appearing for the respondent.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For deciding the appeals, Commissioner (Appeals) recorded following findings:-
"4.2 The issues involved in the case are:-
a) The service provided by the Company don‟t qualify as export;
b) The application is hit by the doctrine of unjust enrichment as the service tax has already been collected from the recipient, the application for refund of service tax is hit by the docirine of unjust enrichment;
c) There is no mechanism to claim refund of service tax paid on exports w.e.f. 1 July 2012 as the notification which allowed refund of service tax on exports of services is not applicable w.e.f. 1 July 2012;
4.3 Now I discuss each of the above issues separately below.
The services provided by the Company qualify as exports 4.4 The adjudicating authority while passing the order has „held that services have been provided in India and just because the invoice has been issued to a recipient outside India, such service does not qualify as export. The condition sufficient and necessary for a service to qualify as export have been listed in Rule 6A of the Service Tax Rules 1994 and are as under:
1. Provider of service is located in the „taxable territory:
-„ Service Tax Appeal No.70009 of 2020 & 12 Service Tax Appeal No.70712-70713 of 2024
2. Recipient of service is located outside Tndia:
3. Service is not a service specified in the section 66D of the Act (i.e. negative list);
4. Place of provision of the service is outside India: 5 Payment for such service has been received by the provider of service in convertible foreign exchange;
6. Provider of service and recipient of service are not merely establishments of a distinct pecson (ie. the transaction should not be between branch office and head office of the same company):
4.5 The two main conditions which need to be evaluated, given that all other conditions are satisfied, are:
The recipient of service is outside India. The place of provision of services is outside India. 4.6 There is no definition of "rec1plent" in the service tax law.
However. the education guide issued along with the negative list of services explains that "Normally, the person who is legally entitled to receive a service and, therefore, obliged to make payment, is the receiver of la service, whether or not he actually makes the payment or someone else makes the payment on his behalf .
4.7 A perusal of the contract between Adobe India and Adobe Ireland shows that Adobe India is providing Marketing and support services to' Adobe Ireland. To provide the said service, Adobe India needs to:
Visit distributors and- direct Customers with a view of promoting existing Adobe; Application Products and Hosted Services to be licensed by Adobe Ireland in the Territory;
Visit distributors, direct customers and strategic partners in order to present and explain -new - Adobe, Application Products and Hosted Services to be licensed by Adobe Ireland in the Territory; Follow up until delivery the orders which are directly put in by distributors and other customers to Adobe Ireland with a copy to the Company;
Service Tax Appeal No.70009 of 2020 & 13 Service Tax Appeal No.70712-70713 of 2024 Visit customers with a view of promoting consultancy and other services to be performed by Adobe Ireland in the Territory in relation to the Adobe Application Products and Hosted Services, and to assist in the provision of such consultancy and other services in the Territory if and when requested by Adaobe Ireland; and Provide other support services from time to time as manually agreed upon by the parties hereto 4.8 The fact that Adobe India has to interact with potential customers of Adobe Ireland does not make those customers as recipient of services, Adobe Ireland continues to be the recipient of services as it has signed the contract making it „legally entitled to receive the service‟ and Adobe Ireland also makes the payment for these services in convertible foreign exchange.
4.9 The definition of „Location of Recipient of Service‟ as mentioned in Rule 2 of Place of Provision of Services Rules 2012 states that:
"location of the service receiver" means:-
(a). where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained;
(b). where the recipient of service is not covered under sub-clause (a);
(i) the location of his business establishment; or
(ii) where services are used at a place other than the business establishment, that "is to say, a fived establishment elsewhere, the location of such establishment; or
(iii) where services are used at more than one-
establishment, whether business or fixed, the establishment most directly concerned with the use of the service; and
(iv) in the absence of such places, the usual place of residence of the recipient of service.
Service Tax Appeal No.70009 of 2020 & 14 Service Tax Appeal No.70712-70713 of 2024 Explanation.-. For the purposes of clauses (h) and (i), "usual place of residence " in case of a body corporate means the place where it is incorporated or otherwise legally constituted.
Explanation 2. ... ........................................." Accordingly in the present case the Location of the service receiver will be outside India as Adobe lreland, who is the recipient, does not have business, fixed or any other establishment in India. Hence, as per the Place of Provision of Services Rules, location of the service recipient in the ingtant case would be Ireland as Ireland is the location where Adobe is incorporated or otherwise legally constituted. 4.10 The above argument is ably supported by various judgments on similar issues. In a very recent judgment of Commissioner of Service Tax, Mumbai-VI vs M/s. Gupshup Technology India Pvt. Ltd. TS-369-CESTAT-2017-ST, wherein the services provided by the Company was in the nature of aggregation of SMS‟es to be sent to the subscribers of Facebook. The revenue alleged that the actual recipients of the services were the Indian subscribers of Facebook and hence, the services were being provided in India. Since the services were being provided in India, the revenue held that the services do not qualify as export of services. However, the honourable Mumbai CESTAT held that the recipient of service is the overseas entity who has the agreement with the Respondent for provision of services. Further, the overseas éntity is responsible to make payment to the Respondent. The honourable CESTAT also observed that there is no contractual arrangement between the subscribers with the Respondent Hence, the CESTAT held that the services provided by the Respondent to the overseas entity would qualify as exports. 4.11 Similarly in case of Paul Merchants' Ltd vs Commissioner 2013 (29) S.T.R. 257 (Tribunal) and GAP INTERNATIONAL SOURCING (INDIA) PVT. LTD. Versus COMMR. OF S.T., DELHI 2015 (37) ST.R. 757 (Tri. - Del,), the Service Tax Appeal No.70009 of 2020 & 15 Service Tax Appeal No.70712-70713 of 2024 tribunal has extensively debated exports under similar conditions and held that services will qualify as exports. 4.12 The Company has also relied on the following -case laws which. have held that the contractual recipient responsible to make the payment would be the actual recipient of services and hence, the services would qualify as exports.
Sumitomo Corporation India Pvt, Lid. versus Commissioner of S.T., Delhi 2017 (50) S.T.R. 299 (Tri. - DEL.) Target Sourcing Service India (P) „Ltd versus Commr of C. Ex. & S.T., Delhi-II 2017 (52) s.t.r. 277 (Tri. - DEL.) Study Overseas Global (P) (Ltd) Versus Commissioner of Service Tax, Delhi 2017 (3) G.S.T.L. 443 (Tri, - Del,) M/s Pipal Research: Analytics & Information:
Services India P Ltd Versus Commissioner of Service. Tax, New Delhi 2017 (10)- TMI 1230 -- CESTAT New Delhi Microsoft Corporation (D Pvt Ltd versus Commissioner 2014-(36) S.T.R. 766 (Tribunal); Basis the above case laws, it can be-seen that the service 1ec1plent in the instant case would be Adobe Ireland i.e. the contractual entity resp0n51ble to make the payment to the Company.
The Respondent has held that the services have been rendered in India and therefore basis the PPS Rules and POT Rules, the services do not qualify as exports. In this respect, it is observed that rendering of services in India does not impact whether the services provided by a Company qualify as exports or not. Whether the services are taxable or exports is determined by the PPS Rules, amongst other conditions. Under the PPS Rules, there is no condition/rule which- provides that where services are rendered in India, they cannot qualify as exports.
Service Tax Appeal No.70009 of 2020 & 16 Service Tax Appeal No.70712-70713 of 2024 Rule 4 of the PPS Rules provides that the place of provision of service for the following services shall be the location where the services are actually performed:
"(a) services provided in respect of goods that are required to be made. Physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service; in order to provide the service:
PROVIDED that when such services are provided from a remote location by way of electronic means the place of provision shall be the location where the goods are situated at the time of provision of service:
PROVIDED FURTHER that this clause shall not apply in the case of a service provided in respect of goods that are temporarily imported into India for repairs and are exported after the repairs without being put 10 any use in the taxable territory, other than that which is required for such repair.
(c) Services provided to an individual, represented either as the recipient of service or a person acting on behalf of the recipient which require the physical presence of the receiver or the person acting on behalf of the receiver, with the provider for the provision of the service."
The services of appellant are not covered under this Rule and should therefore be covered under the default Rule i.e. PoS should be on the basis of the location of recipient of services. As discussed earlier, Section: 2(i) - of the Place of Provision- of Services. Rules 2002 defines the location of the service receiver and in the instant case Adobe Ireland is a corporate entity not registered in India. It has a business establishment located outside India. Adobe India is having direct contract with-Adobe Ireland for the provision of the services by Adobe India. Hence, the location of the service recipient is the location of its business establishment located outside India.
Service Tax Appeal No.70009 of 2020 & 17 Service Tax Appeal No.70712-70713 of 2024 Further, given that all the other conditions have: been satisfied the services provided by the Company should qualify as exports The application is hit by the doctrine of unjust enrichment as the service tax has already been collected from‟ the recipient 4.14 In Para 9 of „Discussions and findings‟ of the Impugned Order; the adjudicating authority has held that the rebate claim of the -Appellants hit by doctrine of unjust enrichment as the Appellant has already collected the service tax from the recipient of service.
4.15 The appellant has provided that the supply is in the nature of export and that under first proviso to sub-section 2 of Section 11B of the Excise Act the principle of unjust enrichment is not applicable to the export of services. The appellant also put forth various judicial decisions wherein it has been held that the principle of unjust enrichment is not applicable in case of export of services. 4.16 As discussed in 4.6 above, where there was no liability to pay service tax, but any amount has been paid, then such amount cannot be retained by the Government of India and provisions. of Section-11B-of- the Central Excise Act, 1944 shall not be applicable. Since, the amount cannot be retained by the Government; principle of unjust enrichment should not be applicable.
However, even if it is held that Section 11B of the 'Central Excise Act, 1944 is applicable on such case, then also the principle of unjust enrichment should not be applicable as the principle of unjust enrichment is not applicable on export of services. The relevant extract has been provided below:
"SECTION [11B. Claim for refund of [duty service tax and interest, if any, paid on such duty service tax]. -- (1) ......... [(2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the-whole or any part of the [duty of excise service tax and interest, if any paid on such Service Tax Appeal No.70009 of 2020 & 18 Service Tax Appeal No.70712-70713 of 2024 duty service tax] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :
Provided that amount of [duty-of-excise service tax and interest; if any, paid on such duty service tax]. as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this subsection shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -
(a) rebate of duty of excise service tax on excisable-goods taxable services exported out of India or on excisable--
materials taxable services used in the manufacture of goods provision of services which are exported out of India; Further, that unjust enrichment is not applicable on export of services has been held in multiple case laws decided by various-courts.
In the case of Vodafone Cellular ltd vs Commissioner of Central Excise, Pune- III 2014 (38) S.T.R. 890 (Tri--Mumbai), it has been-held by the CESTAT, Mumbai that principles of unjust enrichment are not applicable in case of export of services. The relevant extract of Judgment has been provided below for ready reference.
"Since, the transaction is one of export; the principles of unjust enrichment would not be applicable to export transactions as specifically provided in Section 11B"
Further, in the case of Vodafone (India) ltd vs Commissioner of Service Tax, Mumbai-T 2015(40) S. T.R. 699 (Tri Mumbai), „it has been held that in case of export of services, the assesse is entitled to claim refund of the service take paid on such export transaction and there is no need to justify that the assesse has not unjustly enriched themselves. The relevant extract of the judgment has been reproduced below for ready reference:
Service Tax Appeal No.70009 of 2020 & 19 Service Tax Appeal No.70712-70713 of 2024 "We further observe that while disposing of the appeal filed by the Revenue, we have also observed that the transaction involved is one of export; and therefore, the service provider is rightly entitled for the refund of the Service Tax paid".
Similar principles have been held in the following case laws as well:
Indian Oil Corporation Limited (2006 (197) E.L.T. 435 (G.0.L)) CST Ahmadabad vs M/s S Mohanlal (2009 TIOL 2068 CESTAT AHM), Wienerberger. Brick „Industries Pyt Ltd vs Commissioner of S.T. Bangalore (2013(04)LCX0244) Cosmonaut Chemicals vs Union of India, (2009 (233) E.L.T. 46 (Guj ) Pulcra Chemicals (India) Pvt Ltd, vs Commissioner of S.T., Mumbai-II (2015 (39) S.T.R. 700 (Tri-Mumbai) Kirloskar Ebara Pumps Ltd vs Commissioner of C.Ex., Kolhapur (2015 (38) S.T.R. 488 (Tri.-Mumbai)." Accordingly, the refund claims filed by the Appellant should not be hit by the concept of unjust enrichment. ' That there is no mechanism to claim refund of service tax paid on exports w.e.f. 1 July 2012 as the notification which allowed refund of service tax on exports of services is not applicable w.e.f. 1 July 2012.
4.17 In the Impugned Orders, the adjudicating authority has held that the rebate of service tax paid on export of services is no longer available w.e.f. 1 July 2012 as the Notification Number 11/2005--ST dated 19 April 2005 which provided for rebate of service tax paid on export of services is no longer effective.
4.18 The appellant at the outset have provided that since the services provided by them qualify as export of services and no tax can be levied on export of services in terms of Finance Act, amount deposited by the Company is refundable under Article 265 of the Constitution of India. Further, the appellant have provided that the Section 83 of the Finance Service Tax Appeal No.70009 of 2020 & 20 Service Tax Appeal No.70712-70713 of 2024 Act read with Section 11B of the Excise Act 1944 which provides for rebate of service tax paid on export of services is a self-contained code. Just because then is no notification to claim refund of service tax paid one export of services, does not mean that the benefit of refund of service tax paid on export of services should: be denied to the appellant, The appellant has also relied on multiple cases where refund of tax has been „granted on the basis of Form-R (under Section 11B of the Central Excise Act, 1944). 4.19 As discussed in 4.6 above, in case tax under Finance Act, 1994 is not levaible and any amount is paid, then such amount cannot be retained by the Government of India, To grant refund of such amount paid by the appellant there should not be requirement of any specific notification. I find the format in which refund has been filed by the Appellant to be proper and within the provisions of law." 4.3 On perusal of the impugned order and from the grounds of appeal there is no dispute that the services has been provided by the respondent to their principal located in Ireland, hence the services provided qualify as export of services as per Rule 6A of the Service Tax Rules. It is settled principle in across the word that no export should have been subjected to tax within the country of exportation the principle often said goods and services may be exported "in the taxes".
4.4 Central Government/Board have issued Notification No.39/2012 dated 20.06.2012 which provide for grant of rebate of the whole of the duty paid on excisable inputs or the whole of the service tax and cess paid on all input services (input services), used in providing service exported in terms of rule 6A of the said rules, subject to the conditions and limitation provided in the notification.
4.5 Once the fact of exportation is established it cannot be denied those respondents were not required to pay any taxes on the services exported. In this case, respondents had paid the same and claimed the refund of the same, in case these taxes were not paid the credit of input services which were used for Service Tax Appeal No.70009 of 2020 & 21 Service Tax Appeal No.70712-70713 of 2024 payment of these taxes could have been available for grant of rebate as per the said notification. In their appeal revenue have sought to make a deduction in applicability of the said notification and had limited it to the rebate of input taxes only.
Since in the present case respondent is claiming refund of output taxes paid in respect of services exported the same is sought to be denied.
4.6 Further, it is stated in appeal filed by the revenue that the services provided by the respondent are in nature of intermediary services, therefore, the provisions of services would be the location of the services provider. Therefore, these services provided from India would be treated as provided in India and would not qualify as export of services. They relied upon the paras of the agreement between the respondent and their principal which is reproduced above in para-B5 of the grounds of appeal filed by the revenue. It is not understood, how a by-part agreement can be pertained to the case of intermediary services whereby the intermediary services have been defined in the manner which involves three or more parties. The Guide issued by the Board, clarifies as follows:-
Rule 2(f) of Place of Provision of Service Rules, 2012 defines the intermediary as follows:
(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.;
Hon‟ble Delhi High Court in the case of Ernst & Young Ltd. [2023 (73) G.S.T.L. 161 (Del.)] while examining the similar definition under IGST Act, 2017 held as follows:
"20. A plain reading of the aforesaid definition makes it amply clear that an intermediary merely "arranges or facilitates" supply of goods or services or both between two or more persons. Thus, it is obvious that a person who supplies the goods or services is not an intermediary. The Service Tax Appeal No.70009 of 2020 & 22 Service Tax Appeal No.70712-70713 of 2024 services provided by the intermediary only relate to arranging or facilitating the supply of goods or services from the supplier. In the present case, there is no dispute that the petitioner does not arrange or facilitate services to EY entities from third parties; it renders services to them. The petitioner had not arranged the said supply from any third party.
21. It is important to note that the Adjudicating Authority had also accepted that the petitioner has provided the Services. As noted hereinbefore, the Adjudicating Authority had returned a categorical finding that "the party provides services on behalf of E&Y Ltd., UK in India to its (E & Y Ltd., UK) overseas client". The Adjudicating Authority had reasoned that since the petitioner provides services on behalf of E&Y Limited (the petitioner‟s head office), it was an intermediary. This reasoning is fundamentally flawed. The Adjudicating Authority has misunderstood the expression „intermediary‟ as defined under Section 2(13) of the IGST Act. A person who provides services, as opposed to arranging or facilitating of goods from another supplier, is not an intermediary within the definition of Section 2(13) of the IGST Act.
22. In the present case, the petitioner has provided professional services in terms of the service agreements to overseas entities (EY Entities). It had issued the invoices for the said services directly to EY Entities and had received the invoiced consideration from EY Entities, in foreign convertible exchange. As stated hereinbefore, there is no dispute that the professional services were, in fact, rendered by the petitioner. The Adjudicating Authority has proceeded on the basis that since the service agreements were between EY Entities and the petitioner‟s head office (E&Y Limited), the petitioner has rendered services on behalf of its head office (E&Y Limited). It reasoned that since the professional services were rendered on behalf of its head office, the same were not on Service Tax Appeal No.70009 of 2020 & 23 Service Tax Appeal No.70712-70713 of 2024 the petitioner‟s „own account‟; therefore, the petitioner is an intermediary.
23. It is apparent that the Adjudicating Authority has interpreted the last limb of the definition of „intermediary‟ under Section 2(13) of the IGST Act as controlling the definition of the term. We are unable to agree with this interpretation. The limb of Section 2(13) of the IGST Act reads as "but does not include a person who supplies such goods or services or both or securities on his own account"
but this does not control the definition of the term „intermediary‟; it merely restricts the main definition. The opening lines of Section 2(13) of the IGST Act expressly provides that an intermediary means a broker, agent or any other person who "arranges or facilitates supply of goods or services or both or securities between two or more persons". The last line of the definition merely clarifies that the definition is not to be read in an expansive manner and would not include a person who supplies goods, services or securities on his own account. There may be services, which may entail outsourcing some constituent part to a third party. But that would not be construed as intermediary services, if the service provider provides services to the recipient on his own account as opposed to merely putting the third party directly in touch with the service recipient and arranging for the supply of goods or services.
24. Thus, even if it is accepted that the petitioner has rendered services on behalf of a third party, the same would not result in the petitioner falling within the definition of „intermediary‟ under Section 2(13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party."
In the Education Guide issued by the Board, following explanation has been given in respect of intermediary. 5.9.6 What are "Intermediary Services"?
Service Tax Appeal No.70009 of 2020 & 24 Service Tax Appeal No.70712-70713 of 2024 Generally, an "intermediary" is a person who arranges or facilitates a supply of goods, or a provision of service, or both, between two persons, without material alteration or further processing. Thus, an intermediary is involved with two supplies at any one time:
i) the supply between the principal and the third party; and
ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged.
For the purpose of this rule, an intermediary in respect of goods (such as a commission agent i.e. a buying or selling agent, or a stockbroker) is excluded by definition. Also excluded from this sub-rule is a person who arranges or facilitates a provision of a service (referred to in the rules as "the main service"), but provides the main service on his own account.
In order to determine whether a person is acting as an intermediary or not, the following factors need to be considered:-
Nature and value:
An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal.
Separation of value: The value of an intermediary‟s service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as "commission".
Identity and title:
Service Tax Appeal No.70009 of 2020 &
25 Service Tax Appeal No.70712-70713 of 2024 The service provided by the intermediary on behalf of the principal is clearly identifiable.
In accordance with the above guiding principles, services provided by the following persons will qualify as „intermediary services‟:-
i) Travel Agent (any mode of travel) ii) ii) Tour Operator
iii) Commission agent for a service [an agent for buying or selling of goods is excluded]
iv) Recovery Agent Even in other cases, wherever a provider of any service acts as an intermediary for another person, as identified by the guiding principles outlined above, this rule will apply. Normally, it is expected that the intermediary or agent would have documentary evidence authorizing him to act on behalf of the provider of the „main service‟.
In the case of Abbott Healthcare Pvt. Ltd [2019 (31) G.S.T.L. 83 (Tri. - Mumbai)] Mumbai Bench has held as follows:
The term intermediary has been defined by the Rule 2(f) ibid and the phrase "intermediary services" used in Rule 9(c) will have to be interpreted accordingly. Revenue has not shown as to how the appellant has acted as intermediary between the two persons namely service provider and service receiver of the main service. Since nothing has been brought on record to show that appellants were providing the intermediary services to the recipient in manner as defined by Rule 2(f) we do not find any merits in the submissions of the Revenue that place of provision of services in the present case will be location of service provider as per Rule 9. In our view Commissioner has correctly determined the place of provision of service by application of Rule 3 as the location of the service recipient."
Service Tax Appeal No.70009 of 2020 &
26 Service Tax Appeal No.70712-70713 of 2024 4.7 In terms of the above agreement, we do not find anything by which the revenue could be termed as intermediary providing to said services to their principal.
4.8 Even the refund claim was not rejected by the Original Authority on these grounds which has been taken in the present appeals and is even beyond the show cause notice / the Order- in-Original. It is settled principle in law that at the stage of second appeal revenue cannot putforth a new case. Thus, we do not find any merit in such a ground, we find that it is like putting up a new cause for rejection of the claim of the respondent. We find that revenue have challenged the refund claim filed for the period October, 2014 to February, 2015. On the ground of limitation, we find that the limitation for the said period would be filed only in the month of April, 2015 in the present case refund claim has been filed on 21.03.2016. Taking the date of the return to be the starting point the claim would have been filed within the period of limitation prescribed under Section 11B of the Act. Section 11B provides relevant date to mean, in case of export to be the relevant date, the date when there is an evidence of actual exportation, Rule 6A provides as under:-
"6A Export of services (1) The provisions of any service provided or agreed to be provided shall be treated as export of service when,-
(a) .................................
(b) ...........................
(c) ...............................
(d) ................................
(e) The payment for such service has been
received by the provider of service in
convertible foreign exchange, and"
4.9 In case of export of services the export is to be treated only when the payment of service has been received by the service provider in convertible foreign exchange. Accordingly, the date of receipt of foreign exchange should be treated as starting point of period of limitation for computing the period of Service Tax Appeal No.70009 of 2020 & 27 Service Tax Appeal No.70712-70713 of 2024 limitation under Section 11B of the Act. In their appeal revenue has not pointed as to what date such foreign exchange was received and the claim has been filed beyond the said date.
4.10 Even otherwise, it is settled by various decisions that it is at the end of the quarter for which refund claim is filed should be starting point to the limitation. In this case the same would be from 31 March, 2015 refund claim being filed within one year, the said date cannot be hit by the limitation provided under Section 11B.
4.11 The issue raised in para B7 is not relevant for deciding the issue itself for the Appellate Authority/ Adjudicating Authority to decide the manner in which he wish to proceed against the notices/appeals involving the same issue, he could have disposed of by a single order or by impugned order. Even while disposing of the three appeals filed before Commissioner (Appeals) he gave three numbers to the order which clearly shows that there were three distinct order passed in respect of the three appeals. As we find that services provided by the respondents qualify as export to services in terms of Rule 6A of Service Tax Rules, 1994. We do not find any merit in the appeals filed by the revenue, to this extent.
4.12 Appellant revenue has challenged the order of Commissioner (Appeals) for the reason that the refund is also hit by the principles of unjust enrichment, we do not find any merits in the said arguments in view of the second proviso to Section 11B (ii), which reads as under:-
"[(2) If, on receipt of any such application, the Assistant 6[Principal Commissioner of Central Excise or Commissioner of Central Excise[ 15[or Deputy 6[Principal Commissioner of Central Excise or Commissioner of Central Excise]] is satisfied that the whole or any part of the 3[duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:
Service Tax Appeal No.70009 of 2020 & 28 Service Tax Appeal No.70712-70713 of 2024 Provided that the amount of 3[duty of excise and interest, if any, paid on such duty] as determined by the Assistant 6[Principal Commissioner of Central Excise or Commissioner of Central Excisec] 15[or Deputy 6[Principal Commissioner of Central Excise or Commissioner of Central Excise]] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to--
(a) --------------------------------
(b) ------------------------------------
(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;
(d----------------------------------
(e) -------------------------------------------
(f) ----------------------------------------------." 4.13 As the issue in the present case is with regards to refund of credit of duty paid on inputs or service tax paid on input services, the case of respondents shall be covered squarely by above referred clause 'C'. Thus the refunds cannot be said to be hit by the principles of unjust enrichment 5.1 Appeals filed by the revenue are dismissed.
(Operative part of the order pronounced in open court) (P.K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp