No Tripartite Agreement: CESTAT Rules Services to Overseas Clients as Export, Dismisses Revenue’s Appeal [Read Order]

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) dismissed the Revenue’s appeal, ruling that services provided to overseas clients qualified as exports due to the absence of a tripartite agreement.

The Revenue-appellant, challenged the order passed by Commissioner (Appeals),dated October 16, 2020,which upheld the original authority's decision to drop the demand, treating the services to overseas clients as exports.

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In this case,U.V. Graphics Technologies Pvt. Ltd.,respondent-assessee,had an agreement with an overseas client to identify prospective customers for goods sales. All further dealings, including the sale agreement, supply, and payment, were between the overseas supplier and Indian buyers, with no involvement from the assessee.

Following an audit objection, a Show Cause Notice was issued, treating the assessee as an intermediary under Rule 9 of the Place of Provision of Service Rules, 2012, and denying the export benefit.

The original authority dropped the demand, and the first appellate authority upheld this decision. The Revenue appealed before the tribunal aggrieved by the decision.

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The two member bench comprising P.K.Choudhary (Judicial Member) and Sanjiv Srivastava(Technical Member) reviewed the impugned order and submissions made during the appeal. It found that the assessee only identified potential buyers for SRAG, while SRAG handled the sales, retained the title of the goods, and received payments directly. The assessee's role was limited to promoting SRAG’s products, checking buyer solvency, and helping build SRAG’s brand in India.

The appellate tribunal noted that the arrangement involved only two parties, not the three required for intermediary services under the Place of Provision of Services Rules, 2012. It referred to Central Board of Indirect Taxes and Customs(CBIC)’s guidance, which clarified that intermediary services involve facilitation between two or more parties, not direct service provision.

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Relying on the Mumbai Bench’s decision in IDEX India Pvt. Ltd. and the Delhi High Court’s ruling in Cube Highways, the CESTAT held that since the assessee provided services on its own account, it did not qualify as an intermediary.

In short, the tribunal dismissed the Revenue's appeal due to the lack of a tripartite agreement.

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