Custom, Excise & Service Tax Tribunal
R S Granite Machine Tools Pvt Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 23 January, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Court : SM - B3
Appeal No. ST/42302/2018
(Arising out of Order-in-Appeal No. 344/2018 (CTA-I) dated
09.07.2018 passed by the Commissioner of GST & CE
(Appeals-I) Chennai).
M/s. R.S. Granite Machine Tools Pvt. Ltd. : Appellant
Vs.
The Commissioner of GST & CE (Chennai-North): Respondent
Appearance Shri P.C. Anand, Consultant, for the Appellant Shri L. Nandakumar, AC (AR) for the Respondent CORAM :
Hon'ble Shri P. Dinesha, Member (Judicial) Date of Hearing: 16.01.2019 Date of Pronouncement: 23.01.2019 FINAL ORDER No. 40155/2019 A Show Cause Notice (SCN) dated 31.05.2017 was issued covering the periods October, 2014 to March, 2016 alleging interalia that the commission received by the appellant from the appellant‟s service recipients located outside India, was liable to service tax as per the amended Rule 2 (f) of the Places of Provisions of Services Rules, 2012 2 (POPS) w.e.f. 01.10.2014. After considering the explanation filed by the assessee, the adjudicating authority vide Order-
in-Original No. 6/2018 dated 05.02.2018 confirmed the proposed demand and consequently appropriated the payments made towards the service tax and also interest. In the order, the adjudicating authority has negated the pleadings of the appellant that their services came under the purview of export of services in terms of 6A of the Service Tax Rules, 1994 (STR). Not having met with success in its first appeal before the Commissioner of GST & CE (Appeals-I), Chennai, the present appeal is filed before this forum.
2. Shri P.C. Anand, Consultant appeared for the assessee and his contentions are summarized as below:-
The appellant had entered into agreement with two foreign suppliers in the year 2011 and since then the appellant has been providing the same and the only service of identifying Indian buyers for the above foreign suppliers.
The amendment to definition in Rule 2 (f) of POPS w.e.f. 01.10.2014 only inserted words „or supply of goods‟ and but for this, there is no other change. As per Rule 2 (f), intermediary would mean a broker, an agent or any other person by whatever name 3 called, but would not include a person providing the main service.
Appellant‟s main and only service is obtaining orders from the Indian customers and passing on the same to the foreign manufacturer/appellant‟s Principals The words „supply of goods‟ inserted post amendment is not in addition to the facilitation of a service since, there is „or‟ in between.
Right from the beginning, facilitating the provision of service by identifying the Indian customers and obtaining orders is the only and main service of the appellants.
The extract of education guide published by CBEC made it further clear that a commission agent who buys and sells goods is not an intermediary. Rule 3 of the POPS makes it clear that the place of provision of service shall be the location of the service recipient whereas Rule 9 ibid prescribes the place of provision of specified services in the nature of intermediary services is that of the location of the service provider, etc. He also relied on the following case laws in support of his contentions:-
1. ABS India Ltd. Vs. CST, Bangalore 2009 (13) STR 65 (Tri.-Bang.)
2. AERO Products Vs. CST, Bangalore 2009 (15) STR 225 (Tri.-Bang.) 4
3. Godaddy India Web Services Pvt. Ltd.
2016 (46) STR 806 (AAR)
4. Universal Services India Pvt. Ltd. 2016 (42) STR 585 (AAR)
3. Per contra, Ld. DR, Shri L. Nanda Kumar, appeared for the Revenue supported the findings of the lower authorities.
4.1 I have considered the rival contentions, perused the documents placed on record, have also gone through the orders of the lower authorities and also gone through the orders relied on during the course of the arguments. The short point is whether the provision of service which was exempted from service tax by virtue of being an export service could become taxable after 09.10.2014. The amended Rule 2 (f) (w.e.f. 01.10.2014) reads as under:-
"Rule 2 (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) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account‟".
4.2 It is not the case of the Revenue that the appellant arranges or facilitates other services as well, in addition to the above, to its „Principals‟ nor is the case of the Revenue 5 that the appellant had suppressed the provision of any other service. The Revenue has also nowhere disputed the above service rendered by the appellant, ie., procuring/obtaining orders for its Principals located outside the taxable territory, for which the commission is paid by its Principals as also the fact of that obtaining orders from the Indian customers is the main and the only service rendered by the appellant. I find the above service is a taxable service but for the fact that it is an export of service and the same stood exempted for all the preceding years. This fact is also vouched by the granting of refund by the Revenue for an earlier period, vide OIO No. 93/2013-(R) dated 07.08.2013. 4.3 Rule 3 of POPS Rules which is relied on by the appellant, reads as under:-
"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"
(inserted vide Notification 46/2012-Service Tax) 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 9 ibid, relied on by the Revenue, reads as under:-"
"Place of provision of specified services:- 6
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- Service Tax
(c) Intermediary services:
(d) Service consisting of hiring of means of transport other than, - (i) aircrafts, and (ii) vessels except yachts upto a period of one month."
4.4 On perusal of the above Rules, I find that Rule 3 is the general Rule whereas, Rule 9 is specific and also covers „intermediary service‟. Therefore, if the service of the appellant herein is held to be that of intermediary services, then Rule 9 will automatically apply. If not, Rule 3 will apply. Rule 2 (f) excludes the services of intermediary if the person whose main service is arranging or facilitating a provision of service, which also stands automatically excluded from the purview of Rule 9 and thus would fall under Rule3.
5. The facts of the case as analysed elsewhere in this order, make it clear that obtaining/procuring order for its foreign Principals is the main service rendered by the appellant and consequently, rigors Rule 9 vis-à-vis Rule 2
(f) are not applicable. In view of the above, I am of the considered opinion that Rule 3 of POPS Rules would only apply and therefore the appellant cannot be fastened with 7 tax liability. For the above reasons, demand as well as the impugned order are not sustainable and consequently, the same are set aside and the appeal stands allowed with consequential benefits if any, as per law. (Order pronounced in the open Court on 23.01.2019) (P.DINESHA) MEMBER (JUDICIAL) BB