Custom, Excise & Service Tax Tribunal
Cjk Knowledge Works Global India Pvt Ltd vs Noida on 21 August, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70683 of 2018
(Arising out of Order-in-Appeal No.19-24/vk;qDr@esjB@2018 dated 14/03/2018
passed by Commissioner (Appeals) Central Goods & Services Tax, Meerut)
M/s CJK Knowledge Works Global India Pvt. Ltd.,
.....Appellant
(C-25, Sector-62, Noida-201301)
VERSUS
Commissioner of Central Excise & CGST, Noida
....Respondent
(C-56/42, Sector-62, Noida-201307) WITH I. Service Tax Appeal No.70684 of 2018 (M/s CJK Knowledge Works Global India Pvt. Ltd.); II. Service Tax Appeal No.70685 of 2018 (M/s CJK Knowledge Works Global India Pvt. Ltd.); III. Service Tax Appeal No.70686 of 2018 (M/s CJK Knowledge Works Global India Pvt. Ltd.); IV. Service Tax Appeal No.70687 of 2018 (M/s CJK Knowledge Works Global India Pvt. Ltd.); V. Service Tax Appeal No.70688 of 2018 (M/s CJK Knowledge Works Global India Pvt. Ltd.); (Arising out of Order-in-Appeal No.19-24/vk;qDr@esjB@2018 dated 14/03/2018 passed by Commissioner (Appeals) Central Goods & Services Tax, Meerut) VI. Service Tax Appeal No.70424 of 2019 (M/s CJK Knowledge Works Global India Pvt. Ltd.); VII. Service Tax Appeal No.70425 of 2019 (M/s CJK Knowledge Works Global India Pvt. Ltd.); VIII. Service Tax Appeal No.70426 of 2019 (M/s CJK Knowledge Works Global India Pvt. Ltd.); (Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1556-1558-18-19 dated 10/10/2018 passed by Commissioner (Appeals) Central Goods & Services Tax, Noida) APPEARANCE:
Shri Sanjay A. Chhabria, Chartered Accountant & Shri Anurag Hans, Chartered Accountant for the Appellants Smt Chitra Srivastava, Authorised Representative for the Respondent Service Tax Appeal Nos.70683-70688 of 2018
2 & 70424-70426 of 2019 CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NOs.70845-70853/2024 DATE OF HEARING : 21 August, 2024 DATE OF DECISION : 21 August, 2024 SANJIV SRIVASTAVA:
This appeals are directed against Order-in-Appeal No.19- 24/vk;qDr@esjB@2018 dated 14/03/2018 passed by Commissioner (Appeals) Central Goods & Services Tax, Meerut & Order-in- Appeal No.NOI-EXCUS-001-APP-1556-1558-18-19 dated 10/10/2018 passed by Commissioner (Appeals) Central Goods & Services Tax, Noida. By the impugned order, Commissioner (Appeals) has upheld the various Order-in-Originals confirming that services provided by the appellants do fall under the category of 'Online Information Data and Access Retrieval' (OIDAR) Service by application of Rule 9 of Place of Provision of Service Rules, 2012. These provisions of service would be applicable within India and cannot be treated as export of service. Hence, the refund claim under Rule 5 of Cenvat Credit Rules would not be admissible to them.
2.1 Appellant is engaged in providing taxable services and have registered for providing output services namely Online Information and Database Access or Retrieval Services through Computer Network falling under Section 65 (75) read with 65 (105) (zzzb) of the Finance Act, 1994 for the material period. 2.2 They are availing facility of Cenvat credit in respect of input services being used for providing output services under Cenvat Credit Rules.
2.3 Appellant filed refund claims under Rule 5 of the CENVAT Credit Rules, 2004 claiming that the services provided by them qualify as export off services.
Service Tax Appeal Nos.70683-70688 of 2018 3 & 70424-70426 of 2019 2.4 OIDAR Services as per Rule 6A of Service Tax Rules read with Rule 9 of Place of Provision of Service Rules, 2012 or to be treated as provided at the location of service provider i.e. in India. These refund claims have been rejected for the reason that these are not export of services by the Original Authority by various orders referred in the following table:-
Amount S.No Order No. Period sanctioned
1. Order-in-original No. R-01/DC/DivIII/ST/N0ida/17- October 2015 to INR 18 dated 10.04.2017 December 2015 6,47,862/-
2. Order-in-Original No. R-02/DC/DivIII/ST/N0ida/17- January 2016 to INR 18 dated 10.04.2017 March 2016 7,64,574/-
3. Order-in-original No. R-51/DC/DivIII/ST/N0ida/17- April 2016 to INR 18 dated 09.05.2017 June 2016 6,68,507/-
4. Order-in-original No. R-50/DC/DivIII/ST/N0ida/17- July 2016 to INR 18 dated 09.05.2017 September 2016 8,02,483/-
5. Order-in-original No. R- October 2016 to INR 49/DC/Div11/CGST/N0ida/17-18 dated22.09.2017 December 2016 7,21,389/-
6. Order-in-Original No. R- January 2017 to INR 48/DC/Div11/CGST/N0ida/17-18 dated22.09.2017 March 2017 11,39,249/-
7. Order-in-Original No. R-205/ April 2017 to INR AC/Div11/CGST/N0ida/2018-19 dated09.05.2018 June 2017 9,00,142/-
8. Order-in-Original No. R-164/ AC/DivIII/ST/N0ida/16- April 2015 to June INR 17 dated 29.12.2016 2015 5,75,063/-
9. Order-in-Original No. R-165/AC/DivIII/ST/N0ida/16-17 July 2015 to INR 6,71,781 dated 29.12.2016 September /-
20152.4 Aggrieved appellants filed appeal before Commissioner (Appeals), who have dismissed the appeal of the appellants. 2.5 Aggrieved appellants have filed these appeals. 3.1 We have heard Shri Sanjay A. Chhabria & Shri Anurag Hans learned Chartered accountants appearing for the appellants and Smt Chirta Srivasttava learned Authorized Representative appearing for the revenue.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For holding against the appellants, impugned order records as follows:-
"16 I have carefully gone through the facts of the case, grounds of appeal, records of personal hearing and all Service Tax Appeal Nos.70683-70688 of 2018 4 & 70424-70426 of 2019 other material available on record. I find that the appellant had taken registration for providing Online Information & Database Access or Retrievable (hereinafter referred to as 'OIDAR) Services. The refund claims filed by the appellant under Rule 5 of Cenvat Credit Rules, 2004 read with Notification Number 27/2012-CE(NT) dated 18.06.2012, were rejected on the ground that in case of OIDAR place of provisions of services is governed by Rule 9 of the Place of Provisions of Service Rules 2012, and in this case the place of provisions of service is location of service provider, hence the said services provided by the appellant did not amount to export of service as the service provider was located in India. The appellant has contended that their services are in the nature of Business support services which is governed by Rule 3 of Place of Provisions of Service Rules 2012, under which location of service recipient determines the place of provisions of service.
7. The appellant has contended that they had obtained registration for providing services classified by them as Online Information and Database Access or Retrieval (OIDAR) Service and submitted various reports and returns accordingly. Subsequently, on the advice of the consultant they amended their registration n 2014-15 and started declaring the same as "Support of Business and Commerce service" in their returns.
8. I find that in the instant case the refunds were rejected on the ground that in case of OIDAR service place of provision of service is location of service provider as per the law and as such service provided in subject case can not be treated as export of service. The original adjudicating authorities had attempted to examine nature of service claimed to have been provided by the appellant but they did not provide any agreement giving details of the nature of services being provided by them. Since there was no evidence in the form of any written agreement elaborating the terms and conditions agreed upon between Service Tax Appeal Nos.70683-70688 of 2018
5 & 70424-70426 of 2019 service provider and service recipient, nature and scope of the service provided etc. on record before the adjudicating authorities to ascertain the nature of services provided, the adjudicating authorities put emphasis on the definition of the OIDAR services which means providing data or information to any person in electronic form through a computer network. Accordingly, it was observed that the only requirement for service to qualify as OIDAR service is that data or information should be provided to any person in electronic form through a computer and the impugned services were held as OIDAR service. As regards the rejection of the last two refund claims for the period from April 2014 to Sept, 2014, the adjudicating authorities had taken a view that the registration certificate had been amended suo moto without any evidence to prove the change in nature of service provided and the same was done to claim refunds.
9. At appeal stage the appellant has submitted copies of two agreements, one dated 12.04.2011 effective from 01.04.2011 and another dated 19.11.2013 effective from 01.04.2013. On going through the said agreements it is observed that the first agreement dated 12.04.201lis between Cenveo Inc. USA and Knowledge Works Global Limited, Mumbai (KGL) operative from 01.04.2011 and the second agreement dated 19.11.2013 is between Cezveo Inc. USA and Cenveo Publishers Services India Limited (Cenveo India) operative from 01.04.2013.At the outset it is not clear as to how Knowledge Works Global Limited, Mumbai (KGL) is related to the appellant and how this agreement between Cenveo Inc. and KGL is relevant to present proceedings. Further the second agreement between Cenveo Inc. and the appellant was signed on 19.11.2013 and made operative from 01.04.2013. It is pertinent to mention that the appellant claims to have entered into the above two agreements much before the adjudication in 2017 but they never submitted the same Service Tax Appeal Nos.70683-70688 of 2018 6 & 70424-70426 of 2019 before the original authorities during the adjudication proceedings. The agreements were also not made available during the investigation as mentioned in adjudication order No. 286/AC/Div.-III/Noida/17 dated 31.3.2017.
10. From the two agreements it is noticed that both the agreements mention that KGL/Cenveo India are engaged in the business of providing "content/ data processing and data management services". However, in none of the agreements the nature and scope of the service agreed to be provided by the appellant in terms of these agreements, have been disclosed. The mere mention that KGL/Cenveo India are engaged in the business of providing "content/data processing and data management service" is not enough to establish the nature of services provided by the appellant. I thus observe that none of the agreements give the exact nature and scope of the services provided by the appellant.
11. Further, one of the important criteria for deciding whether the service provided by the appellant is OIDAR service or not, the ownership of data is a very relevant factor, as held in number of cases relied upon by the appellant also. It is not forthcoming from any of the agreements that the data pertained to service recipient and no evidence was provided by the appellant either during adjudication proceeding or at this stage to establish that the ownership of the data was not with the appellant. I thus observe that the appellant has failed to substantiate that the service provided by them to M/s CENEO Inc USA was "Support of Business and Commerce service instead of OIDAR services as declared by them initially.
12. Further as regards the admissibility of Cenvat credit Rs. 50,708/-on the invoices for address other than the registered address, 1 find that the appellant has neither stated nature of input services nor put forth any evidence to establish that these services received at unregistered premises have actually been used in providing output Service Tax Appeal Nos.70683-70688 of 2018 7 & 70424-70426 of 2019 services for which registration was obtained. The services received at unregistered premise would prima facie not be eligible for Cenvat credit and resultant refund. In the present era of self assessment the onus lies on the service provider ie. appellant to establish the nature of the services received and their use in export of services which the appellant has failed to do. Therefore I hold that the credit on the said invoices is not admissible to them." 4.3 OIDAR Services have been defined by the Serviec tax Rules, 1994 for the relevant period read as follows:-
„(ccd) "online information and database access or retrieval services"
means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as,-
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other
intangibles via telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
(v) online supplies of digital content (movies, television shows, music, etc.);
(vi) digital data storage; and
(vii) online gaming;‟;(Substituted vide Notification 48/2016-Service
Tax)
4.4 The facts of the case are that the appellants are a wholly
owned subsidiary of Cenveo Inc., USA and are engaged in the provision of Services' to Cenveo USA of content processing, data management and technical support to it. Cadmus Journal Services Inc. is also a USA subsidiary of Cenveo Inc., USA. The Appellant has entered into an agreement with Cenveo USA/Cadmus (hereinafter referred to as foreign entity) for the provision of such services and receives consideration on a cost-
plus basis in convertible foreign exchange.
Service Tax Appeal Nos.70683-70688 of 2018 8 & 70424-70426 of 2019 As per the above agreement, foreign entity provides raw data to the Appellant in form of manuscripts, articles, photographs and other content required for carrying out the various activities by the Appellant such as copyediting, typesetting, formatting, proofreading, graphic designing, indexing, coding, etc. by using human skill and labour on such data and sends the same in electronic form through internet for access by foreign entity. In this whole process, the ownership of the data vests solely with the foreign entity and is not transferred to the Appellant. The services provided by the appellant do not qualify as OIDAR services as per the above definition. 4.5 As per the provisions of the said services, appellants are not owing or providing any data through the network of computers to anybody, their services do not fall under the category of OIDAR Services. A basic requirement for classification under the said category that services should have been in respect of the data owned by the person by way of providing access and retrieval of the same to some other person. Nothing has been brought on record to show that appellants have provided any of such services. Just for the reason that appellants have got themselves registered under this category, cannot be a reason for holding that the services provided by the appellants fall under this category.
4.6 We also take note of the education guide wherein following has been provided as per para 5.9.5- "5.9.5 What are "Online information and database access or retrieval services"?
"Online information and database access or retrieval services" are services in relation to online information and database access or retrieval or both, in electronic form through computer network, in any manner. Thus, these services are essentially delivered over the internet or an electronic network which relies on the internet or similar network for their provision. The other important feature of these services is that they are completely automated Service Tax Appeal Nos.70683-70688 of 2018 9 & 70424-70426 of 2019 and require minimal human intervention. Examples of such services are :-
(i) online information generated automatically by software from specific data input by the customer, such as web-based services providing trade statistics, legal and financial data, matrimonial services, social networking sites;
(ii) digitized content of books and other electronic publications, subscription of online newspapers and journals, online news, flight information and weather reports;
(iii) Web-based services providing access or download of digital content.
The following services will not be treated as "online information and database access or retrieval services":
(i) Sale or purchase of goods, articles etc over the internet;
(ii) Telecommunication services provided over the internet, including fax, telephony, audio conferencing, and videoconferencing;
(iii) A service which is rendered over the internet, such as an architectural drawing, or management consultancy through e-mail;
(iv) Repair of software, or of hardware, through the internet, from a remote location;
(v)Internet backbone services and internet access services."
4.7 As we find that the services provided by the appellants do not fall under the category of OIDAR Services, we do not find any merits for denial of the refund claims filed by the appellants under Rule 5 of Cenvat Credit Rules read with Notification No.27/2012-ST dated 18.06.2012.
4.8 It has been submitted that during the pendency of the Appeals before the Hon'ble CESTAT, the Commissioner (Appeals) has also set aside the Order-in-Original Nos. R34/AC/DIV-1V/N01DA/2017 and R-40/AC/DIV-
Service Tax Appeal Nos.70683-70688 of 2018 10 & 70424-70426 of 2019 1V/N01DA/2017 both dated 28.03.2018 and allowed for the refund of INR 4,83,502/- and INR5,44,695/- for the periods April 2013 to June 2013 and January 2014 to March 2014, respectively vide Order- in -Appeal No. NOI-EXCUS-001-APP- 1931 & 1932-18-19 dated 04.02.2019.
4.9 It is also seen that similar view has been taken by various Courts and Tribunals in the decisions referred bellow:-
Tata Steel Limited v. Commissioner of Central Excise, Jamshedpur, 2016 (Tri. - Kolkata ) Municipal Corporation of City of Thane v. Vidyut Metallics and Anr., 2007 (8) scc 688 Radhasoami Satsang v. Commissioner of Income Tax, 1992 (1) SCC 659 Commissioner of Income Tax v. Gopal Purohit, 2010 (1) TMI 7 BOMBAY HIGH COURT CIT v. Excel Industries Ltd., 2014 (309) ELT 386 (S.C.) Havells Electronics Pvt. Limited vs. CCE Final Order No. A/70244-70261/2017 dated 07.03.2017 4.10 In one of the appeal the issue with regards to denial of certain Cenvat credit has been raised, we find that it has been held constantly that the proceedings of Rule 5 of Cenvat Credit Rules could not have been denied without issuance of a proper notice under Rule 14. This issue is already decided by this Tribunal in the case of M/s INNODATA INDIA PVT. LTD. 2024 (17) Centax 331 (Tri.-All), by following the said judgment, we do not find any merits in the impugned order on this account also. 5.1 Appeals are allowed.
(Operative part of the order pronounced in open court) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp