Custom, Excise & Service Tax Tribunal
M/S.B.A. Call Centre India Private ... vs C.S.T., Gurgaon on 8 March, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT IV
Service Tax Appeal No.ST/52176/2015-EX [SM]
[Arising out of Order-in-Appeal No.41/ST/Appeal-II/SM/GGN/2014-15 dated 13.03.2015 passed by the Commissioner (Appeals-II), Customs & Central Excise, Gurgaon]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.B.A. Call Centre India Private Limited Appellant
Vs.
C.S.T., Gurgaon Respondent
Present for the Appellant : Shri. R. Muralidharan, Consultant
Present for the Respondent: Shri.Vaibhav Bhatnagar, D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing :09.11.2015
Date of Pronouncement: 08.03.2016
FINAL ORDER NO. 52495/2016
PER: S.K. MOHANTY
This appeal is directed against the impugned order dated 13.03.2015 passed by the Commissioner (Appeals-II), Service Tax, Gurgaon, upholding rejection of refund application for Rs.11,75,642/- in the adjudication order.
2. The brief facts of the case are that the appellant is a wholly owned subsidiary of British Airways PLC, United Kingdom (for short, referred to as "B.A."). As per agreement, the appellant provides call centre services to B.A. by addressing calls received from passengers of B.A. and attending to the inquiries of prospective passengers, who are located both in India and outside India. In consideration of such service, the appellant is being remunerated by B.A. on cost plus mark-up basis. The service provided by the appellant falls under the taxable category of 'Business Auxiliary Service'. During the period October to December' 2009, the appellant had filed the refund application for un-utilized Cenvat credit of service tax taken on input service lying in its account, as it had exported the output services without payment of service tax. The refund application was rejected vide adjudication order dated 09.06.2014. In appeal, the ld. Commissioner (Appeals) vide the impugned order has upheld the adjudication order on the ground that the services provided by the appellant do not qualify as export under the Export of Services Rules, 2005, as the performance of the major part of services was in India to the customers in India. Rejection of refund application is the subject matter of present dispute.
3. Shri R. Murlidharan, the ld. Consultant appearing for the appellant submitted that as per the contractual norms, B.A. is the service recipient ad not its customers; that B.A. is responsible for making payment in lieu of the services provided on its behalf and under its instructions; that the payment has been received in convertible foreign exchange. Thus, according to the ld. consultant, since the appellant is fulfilling the conditions of Rule 3(2) of Export of Services Rules, 2005, refund claim of accumulated Cenvat credit is admissible to it. To support his stand that B.A. located in UK is the actual recipient of service, the ld. Consultant has relied on the decision of this Tribunal in the case of Paul Merchants -Vs. - CCE, Chandigarh [2012 - TIOL - 1877 - CESTAT - DEL], Microsoft Corporation (I) (P) Ltd. - Vs. - Commr. of S.T., New Delhi [2014 (36) STR 766 (Tri.-Del.)].
4. On the other hand, Shri Vaibhav Bhatnagar, the ld. D.R. appearing for the Revenue reiterated the findings recorded in the impugned order and further submitted that the ultimate consumption of major part of service provided by the appellant was in India and hence, the condition of 'used outside India' specified in Rule 3(2) of the Export of Service Rules, 2005 has not been fulfilled by the appellant.
5. I have heard the ld. counsel for both sides and examined the records.
6. The issue involved for consideration by this Tribunal is who is the actual service recipient for the purpose of Rule 3(2) of the Export of Service Rules, 2005? whether it is B.A. located in UK or its customers located in India as well as outside India.
7. The period of dispute in this case is from October to December' 2009. Sub-rule (2) of Rule 3 of the Export of Service Rules, 2005 mandates that the provision of taxable service specified in sub-rule (1) shall be treated as export of service, when the conditions itemized therein are satisfied, namely such service is provided from India and used outside India; and payment for such service is received by the service provider in convertible foreign exchange.
8. The appellant had provided Call Centre Services to B.A. based in UK. There is no contract/agreement between the appellant and the customers of B.A. to provide any service. B.A. has made the payment to the appellant for the services provided to the third party (customers of B.A.) in convertible foreign exchange. Since, service tax is a "destination based consumption tax", the test to be applied for ascertaining the actual consumer of service is the person who pays for the service and not the person who benefited from the service. In the present case, it is not in dispute that as per the contractual obligation, B.A. had paid to the appellant for the cost of services rendered to the customers at its behest. Thus, in my considered view, B.A. should be regarded as the recipient of service.
9. In the case of Paul Merchants (supra), this Tribunal in para 21 of the order has explained the term 'used outside India' in context of usages of services by the service recipients. The relevant portion of the order is extracted below:-
Further as already explained PML is getting their payment from Western Union located abroad and it is very obvious that the service is used by the person making the payment and not the recipient of money in Indian who does not make any payment. The Western Union is getting their payment from the person remitting money abroad and hence obviously the services rendered by PML is ultimately used by the person remitting the money from abroad. So we come to the conclusion that the impugned service is used outside India and would qualify as export of services as per conditions laid down in Rule 3 (1) (iii) of Export of Services Rules, 2005.
10. Further, this Tribunal in the case of Microsoft Corporation (supra), while negating the views of Revenue in an identical set of facts has held that the person availing the service and paying for the service is the ultimate beneficiary of service and since the recipient of service is located outside India, provision of service by the Indian service provider should be construed as export for the purpose of Export of Service Rules, 2005. The relevant portion of the Tribunals order is extracted hereinbelow:-
23.I am of the view that the service that is sought to be taxed is the service provided to the person paying for the service and not the service which is provided to a person in India who is not paying for the service though such person may also be a beneficiary of such service.
29. I have difficulty in agreeing with the argument that export of service should be determined, especially in the case of category-III services, by looking at the origin and termination of activities constituting a service because this test is not laid down in the Rules.. 30.?The outcome of the above interpretation is that if a person does market promotion for a manufacturer located outside India for selling the goods in India after its import, the goods will be considered to be imported but the marketing services will be considered to be exported. It may prima facie appear to be contradictory. But this is the outcome of the Rules as it exists now and this was the position clarified by CBEC vide Circular No. 111/5/2009-S.T., dated 24-2-2009.
11. In view of the settled principle of law, I am of the firmed opinion that B.A. located in UK should be considered as service recipient and the services provided to it by the appellant should qualify as export in terms of Export of Service Rules, 2005, on which no service tax is liable to be paid. Thus, application filed by the appellant claiming refund of accumulated Cenvat credit on the input services is permissible in terms of the cenvat statute.
12. Therefore, I do not find any merits in the impugned order, and thus, the same is set aside and the appeal is allowed in favour of the appellant, with consequential benefit.
[Pronounced in the Open Court on 08.03.2016] (S.K. MOHANTY) MEMBER (JUDICIAL) Anita ??
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