Commissioner Of Service Tax, Mumbai vs M/S. Q-India Investment Advisory ...

[Arising out of Order-in- Appeal No. 318 to 322 dtd. 5/8/2013 passed by the Commissioner of Central Excise & Service Tax(Appeals-IV), Mumbai-I]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner of Service Tax, Mumbai : Appellants

VS

M/s. Q-India Investment Advisory Private Ltd. : Respondent

Appearance

Shri. B. K. Iyer, Superintendent (A.R.) for the Appellants None for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 3/7/2015 Date of decision: 3/7/2015

ORDER NO.

Per : Ramesh Nair

These stay petitions and appeals are directed against Order-in- Appeal No. 318 to 322 dtd. 5/8/2013 passed by the Commissioner of Central Excise & Service Tax(Appeals-IV), Mumbai-I, wherein Ld. Commissioner (Appeals), set aside the order-in-original and allowed the appeals of the appellant with consequential relief.

2. The fact of the case is those respondents are engaged in the provision of advisory services falling in the category of Banking and Financial services and Renting of Immovable Property Services. They filed five refund claims for total sum of Rs. 28,04,138/- from time to time under Rule 5 of Cenvat Credit Rules, 2004 read with Notification 5/2006 CE(N.T.) dated 14/3/2006 for unutilized accumulated Cenvat credit earned on account of payment of service tax on the input services which have been used for providing output service exported during the period from October 2007 to December, 2008. The adjudicating authority while disposing of all the refund claims of Rs. 28,04,136/- were rejected on the ground that the service so provided by the appellant were not covered under the export of services and appellant had failed to prove that input service in question had been used in providing output service which are exported as required under Notification NO. 5/2006-CE(N.T.). Aggrieved by the said adjudication order dated 20/8/2009, appellant filed appeals before the Commissioner(Appeals), who allowed the appeal of the appellant by setting aside the order in original. Therefore, aggrieved by the said impugned order, the Revenue filed these appeals alongwith stay application.

3. Shri. B.K. Iyer, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the ground of appeals. He further submits that the respondent entered into agreement with M/s. Tiger Iron LLC Co., USA for the services such as identification advising and recommendation of investment opportunities in India. The analysis, investigation of potential investment and of potential disposition of investments in India, supervision of investment transactions undertaken by the client, its affiliates and designees in India are being carried out by the respondent who is situated in India. In view of these services, it clearly appears that the services were provided in India therefore it cannot be said that services have been exported by the respondent. He further submits that lower authority/ adjudicating authority, since rejected the claim on this account only, has not verified that the admissibility of the input services on which Cenvat credit was taken. It is his submission that since the output services has not been exported Ld. Commissioner has erred in allowing the appeal of the respondent therefore the impugned order is required to be set aside.

4. When the matter was called for hearing, none appeared on behalf of the respondent, nor any adjournment request was found on record from the respondent. Therefore I proceed to dispose of the appeals on merits.

5. I have carefully considered the submission made by Ld. A.R. and perused the records.

6. I find that original authority has rejected the refund application filed under Rule 5 against export of services only on the ground that services by the respondent was provided in India therefore it cannot be treated as export of service in terms of Export of Services Rules, 2005. I find that it is not under dispute that though the services of analyzing, advising, reporting etc carried out in India but the same has been provided to company located in USA therefore service recipient is in foreign country. Whatsoever services were performed by the respondent has been received by foreign company i.e. M/s. Tiger Iron LLC Co., USA. Against these services the recipient has been paid the service charges in convertible foreign exchange in terms of Export of Service Rules, 2005. The provisions of taxable services shall be treated as export of services when the following conditions are fulfilled: (i) Service provided from India and used out side India and (ii) Payment of such services is received by the service provider in convertible foreign exchange. As discussed above these two condition have been complied with, service provided by the respondent although provided in India but it was received and used by the foreign person out side India and the service charges have been received by the service provider in convertible foreign exchange. In view of this undisputed facts, there is no doubt that the output service of the respondent have been exported in accordance with the Export of Service Rules, 2005. As regard the Second issue regarding the admissibility of input service though the original authority has not gone through the said aspect but Ld. commissioner in his findings has categorically contended that all the services have been used in relation to output service which has been exported. Therefore order of the Ld. Commissioner does not require any interference. The findings of the Ld. Commissioner makes it very clear that the respondent are undoubtedly entitle for the refund. The relevant findings are reproduced below:-

7. It is to be seen that adjudicating authorities, in their findings, have recorded that the application in Form-A alongwith the copies of the relevant invoices with the copies of agreements have been produced and sale proceeds in respect of the output services exported have been realized by the Appellants. It is further seen that the Adjudicating authority has stated that the refund of Cenvat is governed under Rule, 5 of Cenvat credit rules, 2004, in respect of where any input or input services is used in providing output service which is exported. The services so provided by the Appellants are not covered under the export of service and therefore the availability and admissibility of the Cenvat credit have not been examined. The Appellants have claimed the refund of the untilized Cenvat credit earned on account of payment of Service tax on various input services such as, support service of business of commerce, Telecommunication service, renting of immovable property, manpower recruitment sercie, management, maintenance and repair service, air travel service, management of business consultant service, courier services and rent-a-cab service, house keeping/cleaning Services, pest control etc. These input services appeared to have been used for providing output service exported. The appellants has submitted their out services. Viz. service provided by them to their investment manager, were in the nature of Investment Advisory Service under Banking and Financial Services which had been exported out of India and sales procceds thereof had been received in convertible foreign currency. In terms of CBEC Circular No. 111/05/2009-ST dated 14/2/2009 the above service comes under the exports of service. Rules 3(2) of the Export of Service Rules, 2005 specifies that the provisions of any taxable services specified in sub-rule (1) shall be treated as export of services when the following conditions are specified:

(a) Such service is provided from India and used outside India; and

(b) Payment of such services is received by the service provider in convertible foreign exchange.

The contention of the Appellants appear to be maintained and acceptable.

8. It is to be seen that the CBEC, while clarifying the applicability of the provisions of Export of Service Rules, 2005 vide their Circular No. 111/05/2009, in para 2(iii) of the said circular, have clarified the position in respect of Category-III[(Rule 3(iiii)] that for the remaining services which would include knowledge or technique based services, which are not linked to an identifiable immovable property or whose location cannot be readily identifiable (such as Banking & Financial Services, Business Auxiliary Services and Telecom Services) it has been specified that they would be export if (a) they are provided in relation to business or commerce to a recipient located outside India and (b) if they are provided in relation to business or commerce to a recipient located outside India at the time when such services are provided. Further, it is clarified that for the services falling under Category III, the relevant factor is the location of service receiver and not the place of performance. In this context the phrase used outside India is to incorporated to mean that the benefit of service should accrue out side India.

Thus, for the Category III services, it is possible that the export of service have taken place even when all the relevant activities take place in India so long as the benefit of these services accrue out side India. In all the illustration mentioned in opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other category III services as well. Further CBEC vide Circular No. 120/01/10-ST dated 19/1/2010 have stated that Cenvat Credit Rules, 2004 permit taking of credit of inputs and input services which are used for providing output services or export goods. In order to zero rate the exports, Rule 5 of Cenvat Credit Rules, 2004 provides that such accumulated credit can be refunded to the exporter subject to fulfillment of the stipulated conditions. Notifications No. 5/2006-CE(N.T.) dated 14/3/2006 provides the conditions, safeguards and limitation for obtaining refund of such credit. In view of the above, the contention of the adjudicating authority that the said advisory services i.e. Banking & Other Financial Services are used in India and as such the benefit of these services is accruing in India and not outside India does not appear to be correct and it is not tenable.

9. In view of the above, I do not see any merit and substance in the findings of the Adjudicating Authorities recorded in the impugned orders for rejecting the subject refund claims of utilized Cenvat credit filed by the appellants in the past. I hold that the refund claim, in question, are allowable to the appellants in terms of Notifications No. 5/2006-CE(N.T.) dated 14/3/2006 issued under Rule 5 of the Cenvat Credit Rules, 2004 read with Section 74 of the Finance Act, 2010. The impugned order are therefore set aside and the subject appeals are allowed with all it consequential reliefs to the appellants.

As per the clear findings of the Ld. Commissioner (Appeals) and my above discussion, I am of the view that the impugned order is just and proper which requires to be maintained and I do so. Accordingly, Revenues appeals are dismissed. Stay applications are also disposed of, accordingly.

(Operative order pronounced in court)

Ramesh Nair Member (Judicial)

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8 ST/S/92577, 92579, 92581/15 & ST/S/92583/15