M/S Centrica India Offshore Private ... vs Cst, Delhi

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of 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?

Service Tax Appeal No. 53238 of 2014-SM

(Arising out of order in appeal No. 14/ST/DLH/2014 dated 29.01.2014 passed by the Commissioner (Appeals), Central Excise, Delhi-I.)

M/s Centrica India Offshore Private Limited Appellant

Vs.

CST, Delhi Respondent

Appearance:

Shri Tushal Gupta, Advocate for the appellant

Sh. Amresh Jain, DR for the Respondent

Coram: Honble Mr. Justice G. Raghuram, President

Final Order No. 51748/2015

Per: Justice G. Raghuram:

The appellant is an Indian corporate entity. For the quarter January 2010 to March 2010, appellant applied for refund, lying in its account, of Rs.23,74,027/-, claiming to have utilised various input services for providing an output business support service, which was exported by the appellant to an overseas entity. The claim was presented under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification Nos. 4/2006-CE (NT) and 5/2006-CE(NT) dated 14.03.2006.

2. The primary adjudication Authority by the order dated 30.09.2013 sanctioned refund of Rs.9,35,388/- while rejecting the claim to the extent of Rs.13,92,112/-. The primary Authority rejected the refund claim partly on the ground that support services of business or commerce which the assessee had provided to its overseas associated enterprises and for which it had received remuneration in foreign exchange, was not used outside India but within the Indian territory.

3. Aggrieved by the primary order, to the extent its claim for refund was negated, the assessee preferred an appeal. The learned Commissioner (Appeals), Delhi-I by the order impugned dated 25.04.2014 rejected the appeal and concurred with the primary Authority and concluded that services provided by the appellant were not used outside India.

4. The appellant entered into service agreements with its overseas associated enterprise M/s Centrica Plc to assists in managing partnership with suppliers in India and for facilitating efficient interface; to ensure that suppliers follow best practices andshare such best practices and processes utilised in India and in e2e are optimized; to advise on widening the scope of potential services delivered in India through a direct workforce in greater control and other associated services. The assessees overseas associate had subsidiaries and affiliates such as British Gas Trading Limited and Direct Energy Marketing Limited which were served by Indian call centres namely EXL and WNS. The role of the assessee under its arraignment with its overseas associate enterprise was to provide the interface and operational synergy between BGTL and DEML and Indian call centres - EXL and WNS.

5. Admittedly, remuneration for services rendered by the assessee to overseas entities was received in convertible foreign exchange. The recipient of the service is located outside India, undisputedly.

6. The basis recorded by the learned appellate Commissioner for rejecting the claim for refund is predicated on the conclusion that the service provided by the assessee was not used outside India. Reliance for this is placed in the impugned order on the Board Circular dated 13.05.2011 which purports to clarify the expression accrual of benefit and use outside India.

7. The facts and circumstances in this appeal are identical to the facts that fell for consideration by the larger Bench of this Tribunal in Paul Merchants vs. CCE, Chandigarh  2013 (29) STR 257 (Tri. Del.), the ratio whereof was reiterated in Microsoft Corporation (India) Pvt. Limited vs. CST, New Delhi  2014 (36) STR 766.

8. The above decisions have clearly ruled that since the benefit of services provided to the foreign recipient accrue economic benefit to the overseas entity, the transactions fall within the ambit of export of services, used outside India. Applying the ratio to the present case, the interface provided by the assessee to synergize activities of the overseas entities and Indian call centres would be export of services. Since this service accrues to the benefit of the overseas entity and is therefore to be considered as having been used outside India and for the benefit of the overseas entity.

9. On the aforesaid analyses the appeal is allowed, the impugned order of the lower appellate Authority is set aside and it is declared that the appellant shall be entitled to refund of unutilised cenvat credit to the extent of Rs. 13,88,262/-. No costs.

(Justice G. Raghuram)

President

Pant

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