The Hyderabad bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) in a recent ruling in favour of HSBC Electronic Data processing (India ) Ltd. remanded the issue on Exclusions made for Determining ‘export turnover on the services’ applying Formula A as per notification. The order was remanded back to the Original Sanctioning Authority, who shall take into account the observations and the Order passed by the Tribunal vide Final Order dt.17.01.2024 and thereafter, make necessary corrections in their record.
HSBC Electronic Data Processing (India) P Ltd,the appellant filed appeal with regard to certain exclusions made by the Department for the purpose of arriving at the ‘export turnover on the services’ in terms of Notification 05/2006-CE(NT) dt.14.03.2006, as amended by Notification 27/2012-CE(NT) dt.18.06.2012. It was stated that the said exclusions made for the purpose of arriving at the ‘export turnover of the services’ in applying the formula prescribed in Form A to the said notification-
i) Services provided by the appellant in connection with contact centre services and credit/debit card operations (viz., outbound call centre services) should be classified as ‘intermediary services’ and excluded from export turnover in applying the said formula.
ii)Reimbursement in the nature of foreign exchange received towards services provided by the appellant to personnel of foreign customers who visit India for inspection of export activity to be excluded from export turnover in applying the said formula.
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It was mentioned that both the issues have been dealt with by this Bench in the appellant’s own case for the same period in the context of separate proceeding initiated by the Department for recovery of output tax denying the export benefit claimed in respect of the above turnovers vide Final Order No.A/30020-30021/2024 dt.17.01.2024, wherein, it was held that the above receipts in foreign exchange shall qualify for inclusion in ‘export turnover of the services’.
The appeal prayed for the remand of order back to the Original Authority for the purpose of reworking out the periodic refund claims covered by the aforesaid appeals in terms of Rule 5 of the Cenvat Credit Rules and the relevant notifications in the light of findings in final order dt.17.01.2024 of this Bench in the disputed period from April, 2010 to December, 2015. On the other hand, AR pointed out that the Department is in the process of engaging services of Special Counsel in these appeals.
In the said order the Bench noted that the department has appointed Special Counsel to defend this case and therefore, he may take some time to get himself apprised of the facts and have sought adjournment by about a month’s time. Now, AR submitted that in view of letter dt.16.12.2024, received from the Commssionerate, the Commissioner has not yet appointed any special counsel in these appeals.
The court held that despite considerable lapse of time, the Department has not been able to appoint any special counsel and therefore, there is no need to wait for the special counsel to argue on behalf of the Department. AR reiterated the observations and submissions made by the Original Sanctioning Authority while calculating the amount of entitlement of refund and submits that the order of the refund sanctioning authority is correct.
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The short question is whether certain exclusions made by the original sanctioning authority for calculating ‘export turnover of services’ are correct or otherwise. These services are intermediary services, viz., outbound call centre services and reimbursement in the nature of foreign exchange received towards services provided to foreign personnel who visit India.
The appellant further submitted that in this case as a consequence of these appeals, there would not be any additional amount which will be flowing to them as refund and it is only for correcting the record and for future reference that the formula adopted was not correct.
The two member bench of A.K. Jyotishi, Member (Technical) and Angad Prasad, Member (Judicial) observed that the matter can be remanded back to the Original Sanctioning Authority, who shall take into account the observations and the Order passed by the Tribunal vide Final Order dt.17.01.2024 and thereafter, make necessary corrections in their record.
While allowing the appeal by way of remand, the tribunal also made clear that as a consequence of this exercise, there will not be any additional payment of refund.
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