Custom, Excise & Service Tax Tribunal
Qualcomm India Pvt Ltd vs Commissioner Of Service Tax Mumbai-I on 7 June, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH - COURT NO.1
Appeal No.ST/89346/2014-MUM
[Arising out of Order-in-Appeal No.593/PD/14, dt.28.05.2014 , passed by
the CCE & ST (Appeals-IV), Mumbai-I]
M/s Qualcom (I) Pvt. Ltd ......Appellant
Unit No.1102, Platina Building G Block,
11th Floor, Plot No.C-59, BandraKurla Complex,
Mumbai 400 051
VERSUS
Commissioner, C.E. & S.T., (Appeals-IV), ......Respondent
4TH Floor, Utpad Shulk Bhavan, Plot No.C-24, Sector E, BandraKurla Complex, Bandra (East), Mumbai 400051 WITH Appeal No.ST/89806/2014-MUM [Arising out of Order-in-Appeal No.631/PD/MUM/2014, dt.28.05.2014, passed by the CCE & ST (Appeals-IV), Mumbai-I] M/s Qualcom (I) Pvt. Ltd ......Appellant VERSUS Commissioner, C.E. & S.T., ......Respondent Appearance:
Shri Prasad Paranjape, Advocate for the Appellant Shri M.K. Sarangi,ADC (AR)for the Respondent CORAM:
HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MR. C.J. MATHEW, MEMBER ( TECHNICAL) FINAL ORDER NO.A/86077-86078/2019 Date of Hearing: 10.12.2018 Date of Decision: 07.06.2019 Qualcom India-38934614 etc resd 2 PER: D.M. MISRA These appeals are filed against OIA No.593/PD/14, dt.28.05.2014 and OIA No. 631/PD/MUM/2014, dt.28.05.2014, passed by the CCE & ST (Appeals-IV), Mumbai-I.
2. Briefly stated the facts of the case are that during the relevant period, the Appellants had provided the services under the category of Business Auxiliary Service and Manpower Recruitment & Supply Agencies Services and since they have exported the Business Auxiliary Service, accordingly claimed refund of accumulated CENVAT Credit in accordance with Rule 5 of CENVAT Credit Rules, 2004for the period from October 2008 to December 2008 and January 2009 to March 2009 for an amount of Rs.65,13,067/-. On adjudication, the said refund claims were rejected. Aggrieved by the order of the Adjudicating authority, the Appellant had filed appeals before the learned Commissioner (Appeals), who in turn, rejected their appeals. Hence, the present appeals.
3. At the outset, the learned Advocate submitted that the Appellant had by an agreement dt.27.09.2004 with M/s Qualcomm, INC, agreed for providing marketing, promotional and other services from its Mumbai and New Delhi offices to them and received on rendering such services in Foreign Exchange. They had availed CENVAT Credit on various input services used for providing the output services; the export services claimed by the Appellant, as 'export of services ', under Export of Services Rules, 2005, and since the Appellant could not utilise the CENVAT Credit, they filed periodical cash refund claims of accumulated credit under Rule 5 of CENVAT Credit Rules, 2004. He has contended that in Appeal No.ST/89346/2014-MUM, the services pertain to non-GBD division. The Department has rejected the refund claims on the ground that the services rendered by the Appellant is not an export services. Narrating the services rendered by them, the learned Advocate submitted that the non-GBD of Qualcom India-38934614 etc resd 3 the Appellant comprises of three divisions viz. Engineering services, Internet services, and Chipset Technology services. All these divisions provides services on behalf of M/s Qualcomm, USA to the clients of Qualcomm in India and South Asia. On provisions of the services, the Appellant raised invoices on Qualcomm USA and received payments in convertible foreign exchange. It is the contention of the Appellant that these services merits classification as Business Auxiliary Services and the recipient of these services i.e. Qualcomm, USA being located outside India, hence the services be considered to have been delivered and used outside India. Further, the payments for the services were being received in foreign exchange. Therefore, these services would qualify as export services under Export of Services Rules, 2005. It is his contention that during the period October 2008 to March 2009, due to confusion in the applicability of service tax to them, they paid the service tax which they were not required to pay. The Appellant has utilised the CENVAT Credit of Rs.76,86,360/- in discharging such services and had disclosed the same in the service tax returns filed on 27.04.2009. Thereafter, on the basis of Board's Circular dt.24.02.2009, they considered the service rendered by non-GBD division as export, consequently filed the revised service tax returns claiming these services as export. The service tax charged to Qualcomm, USA in the invoices earlier raised was refunded to them. Consequently, the Appellant had claimed refund of CENVAT Credit accumulated in accordance with Rule 5 of CENVAT Credit Rules 2004. It is his contention that the authorities below rejected their refund claim holding that payment of service tax was in order and they are not eligible to export benefit as the services rendered by them did not qualify as export. In support of the contention that the services rendered by them are export, they referred to the judgment in the case of Microsoft Corporation (I) Pvt. Ltd Vs Commissioner of Service Tax, New Delhi - 2017-TIOL-2648-CESTAT-DEL and Paul Merchants Ltd Vs CCE Chandigarh Qualcom India-38934614 etc resd 4
- 2013 (29) STR 257 (Tri-Del). The learned Advocate has also vehemently argued that in the Appellant's own case for the period prior to the present dispute as well as for the subsequent period, accepting the service rendered by the Appellant qualify as an export services, allowed refund/rebate as claimed by the Appellant from time to time.
4. The learned Advocate further argued that the Appellants availed Centralised Accounting & Billing System at its Mumbai office. All transactions carried out from Mumbai or Delhi offices are reflected in the books of account maintained at the Mumbai office. The Appellants had raised its consolidated invoice on its client from its Mumbai office for the services rendered either from Mumbai office or Delhi office. The Delhi office of the Appellant availed various input services in connection with the provision of output services. Since the billing is only from Mumbai office, therefore, the Delhi office has obtained ISD registration in October 2006 and the entire credit availed by Delhi office is distributed to Mumbai office in terms of Rule 7 of CENVAT Credit Rules, 2004. The credit was denied on the ground that they have failed to produce any documentary evidence to show that the Delhi office belongs to them and the input services are meant for their Mumbai office. The learned has Advocate submitted that both the Delhi office and Mumbai office belongs to the same legal entity and the service tax liability for rendering taxable service is discharged by their Mumbai office. The service tax department in Delhi has granted ISD registration to the Appellant's Delhi office, which has not been withdrawn and Appellants complied all requirements of Rule 7 of CENVAT Credit Rules 2004, therefore, denial of credit on this count is untenable. The same line of arguments are repeated for Appeal No.ST/89806-MUM in relation to their GBD division. In addition, they had submitted that the refund of CENVAT Credit was not allowed on certain input services viz. Club or Association Service, Rent-a-cab, Real Estate Agency service, Convention Qualcom India-38934614 etc resd 5 Service, Commercial or Industrial services on the ground that the same do not satisfy the definition of input service. It is his contention that the dispute pertains to the period prior to April 2011 and all these input services are held to be covered under the scope of the definition of 'input service' as prescribed under Rule 2(l) of the CENVAT Credit Rules 2004, in various judgments of the Tribunal viz. Reliance Industries Ltd. Vs. CCE & S.T., LTU,Mumbai 2016 (45) STR 383( Tri.-Mum.), Allign Global Services Pvt. Ltd. Vs. CCE & ST, Hyderabad-IV - 2016 (40) STR 113 (Tri- Hyd) relating to Club or Association Service, Innova Vs. CCE, Mumbai - 2015 (38) STR 1252 (Tri-Mum) relating to rent-a-cab service and Accenture Services Pvt. Ltd. Vs. CST, Mumbai-II - 2015 (40) STR 719 (Tri-Mum) with regard to convention services, accordingly eligible to credit.
5. Ld. A.R for the Revenue reiterated the finding of the Ld. Commissioner(Appeals). He has contended that Global Business Development (GBD) Division performs Business promotion and government relation services, whereas non-GBD Division Engineering Services Group (ESG), Qualcom Internet Services renders the support service to the client in India. It is his contention that the services provided by non-GBD Division viz. technical guidelines support and training services are in the nature of service provided in India and cannot be considered as export of service, hence, the cash refund of accumulated credit is not admissible to the Appellant. Also, he has submitted that denial of credit on input service relating to their Delhi office is correct as no output service was rendered from the said Office.
Qualcom India-38934614 etc resd 6
6. Heard both sides and perused the records.
7. The limited issues involved in the present appeals for determination are - (i) whether the services rendered by the Appellants to Qualcomm, USA is in the nature of export services, hence, accumulated CENVAT Credit be claimed as refund under Rule 5 of CENVAT Credit Rules 2004; (ii) CENVAT Credit of Service Tax paid on input services used in their Delhi office is eligible to credit at their Mumbai office; (iii) credit on input services viz. Rent a cab service, Convention service, club or association service, construction service, etc. are admissible.
8. The services rendered by the Appellant to Qualcomm, USA have been described under clause 1.1. of the Service agreement dt.27.9.2004 between the Appellant and Qualcomm, USA. The same are re-produced as below:
"1.1 QIPL shall provide Qualcomm with the following services, as Qualcomm may direct during the term of this Agreement ("Services"):
• Identifying potential business opportunities; • Distributing and disseminating information on the products and services of QUALCOMM to the wireless telecommunications industry; • Advising on local marketing strategies, local market conditions, and customers' views and requirements regarding QUALCOMM's products and services in the wireless communications market; • Advising on local marketing strategies, local market conditions, and customers' views and requirements regarding QUALCOMM's products and services in the wireless communications market; • General promotion activities for QUALCOMM's technologies, products and services;
• Establishment and maintenance of business relationships with QUALCOMM customers.
Qualcom India-38934614 etc resd 7 • Providing technical guidance, support and training to QUALCOMM customers; and • General administrative assistance and general technical assistance as requested by QUALCOMM.
• Other services as requested by QUALCOMM;
9. It is the plea of the learned Advocate that the present appeals relate to the period October 2008 to March 2009 and October 2009 to September 2009. It is their contention that the cash refund of accumulated credit for the period June 2008 to September 2008 was sanctioned to them by the Adjudicating authority considering the aforesaid services as export of service. For the period from April 2009 to September 2009, when the matter reached this Tribunal the Tribunal held that refund was admissible to them. Further, for the period October 2010 to March 2012, the Adjudicating authority initially not allowed the refund claims, but later the claim has been held to be admissible by the learned Commissioner (Appeals). Also, it is stated during the course of hearing that the department thereafter from April 2012 to March 2017 allowed the refund claims considering the services are exported. It is their contention that since the Department has consistently held that the services rendered by the Appellant to Qualcomm, USA are in the nature of Business Auxiliary Service and recipient of said service since located outside India and the payments are received in foreign exchange, therefore, the services fall under the category of Rule 3(iii) of Export of Services, 2005, accordingly, cash refund of CENVAT Credit accumulated is admissible to them. We find force in the contention of the learned Advocate for the Appellant. On going through the earlier refund claims and also subsequent refund claims allowing Qualcom India-38934614 etc resd 8 cash refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules 2004, the department has accepted that the service rendered by the Appellant to Qualcomm, USA are export services in terms of Rule 3(iii) of Export of Service Rules,2005. Also, no evidence has been placed before us indicating that on the said issue appeal has been filed against these orders by the Revenue and ultimately it is held to be not an export services by any Appellate forum. Therefore, denial of cash refund of accumulated credit due to export of service for the interregnum period, in our view, is unsustainable. Similarly, the credit of the input services availed at their Delhi unit which was denied on the ground that no output service is provided from Delhi, has been held to be incorrect and consequently cash refund on this count has been held to be admissible by this Tribunal in their own case reported as Qualcom India Pvt. Ltd Vs CST, Mumbai-I - 2016 (42) STR 886 (Tri-Mum).
10. The credit on the input services viz. Rent a cab service, convention service, club or association service used in rendering output service availed prior to 01.4.2011 held to input service within the definition of 'input service' prescribed under Rule 2(l) of CCR,2004 viz. Reliance Industries Ltd. Vs. CCE & S.T., LTU,Mumbai 2016 (45) STR 383( Tri.-Mum.), Allign Global Services Pvt. Ltd. Vs. CCE & ST, Hyderabad-IV - 2016 (40) STR 113 (Tri-Hyd), Innova Vs. CCE, Mumbai - 2015 (38) STR 1252 (Tri-Mum) and Accenture Services Pvt. Ltd. Vs. CST, Mumbai-II - 2015 (40) STR 719 (Tri-Mum), hence, it is admissible.
Qualcom India-38934614 etc resd 9
11. In these circumstances, we do not find any merit in the impugned orders. Consequently, the same are set aside and the appeals are allowed with consequential relief, if any, as per law.
(Order pronounced in the open court on 07.06.2019) (D.M. Misra) Member (Judicial) (C.J. Mathew) Member (Technical) Bahalkar