The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed service tax demand as the service provider and service recipient located in non-taxable area.
The Officers of Central Tax, Audit Commissionerate, Noida had conducted audit of the records of the Appellant for the period from April, 2013 to June, 2017 during June,18, July,18 & September,18 and observed that in Balance Sheets for 2013-14 to 2016-17, income on two points was shown, (i) from sale of licence and (ii) from sale of services. It was further observed that in the said Balance sheets, under the head of “other expenses and “expenditure in foreign currency”, expenses incurred were shown to be Rs.10,18,89,711/-, Rs.8,93,82,836/-, Rs.9,50,98,590/- and Rs.20,12,62,814/- respectively.
Abhinav Kalra C.A. represented the case on behalf the Appellant and contended that IVP US and BACS had been working as intermediaries and they had been providing intermediary services. They were engaged in Marketing Support Services on account of the Appellant to overseas customers.
Citing the definition of Intermediary Service as provided under Rule 2(f) of the Place of Provision of Services Rules, 2012 (in short “the POP Rules”), he contended that an intermediary arranges provision of service for his principal which would mean to plan, organize, and carry out (an event), put (things) in a neat, attractive, or required order.
A Two-Member Bench comprising PK Choudhary, Judicial Member and Sanjiv Srivastava observed that “In the present case services for which demand was raised were intermediary services. In accordance with Rule 9 of the POP Rules, place of provision of service of intermediary service was location of service provider. Service providers in the instant case were located in USA. Hence, place of provision of service was USA. As both the service provider and service recipient were located in non-taxable area, service tax demanded in this case is not sustainable.”
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