In a recent ruling, the Delhi High Court ruled that the telecommunication company Providing export services and entering separate contracts with Indian telecom operators on its own is not an ‘Intermediary’. Thus, the bench allowed the refund of CENVAT credit.
The Respondent Singtel Global Private Limited (SGIPL), which is a company based in India, being engaged in providing global telecommunication and ancillary support services, and it is claimed that part of its services is also exported.
It entered into an agreement dated 14 July 2011 with SingTel, which is a licensed telecommunications service provider in Singapore. The aforesaid agreement envisaged SGIPL providing necessary infrastructure in India so as to enable SingTel to facilitate seamless global telecommunication services to its customers based in Singapore and other foreign territories.
The Plea of the appellant, Commissioner of Central Tax was that that SGIPL merely procures services from other service providers in India viz., Airtel, Vodafone, Tata, Reliance etc. and supplies the same to Singtel without any alteration; and that SGIPL does not provide the aforesaid services of telecommunications “on their own account” and thus fall within the definition of “intermediary services‟ on a conjoint reading of Rule 6A(1)(d) of the Services Tax Rules 8 read with Rule 9(C) of the POPS Rules.
Per contra, SGIPL contends that the place of provision of services would be considered as per the location of the recipient of services by virtue of Rule 3 of the ST Rules, which is outside India, and that it is not an “intermediary”.
The CESTAT in the impugned order, relying on the Delhi HC case Verizon Communications India Ltd. v Assistant Commissioner of ST, Delhi-III held that there was no scope for doubt that services provided by SGIPL do not qualify as “intermediary services‟ and the services are provided by it out of its own account to SingTel. Accordingly, SGIPL has been entitled to claim a refund totalling Rs. 13,32,91,031/- for the period July, 2015 to June, 2017 towards CENVAT credit.
The plea that SGIPL is not providing any services on its own account is misplaced. It is manifest that there is no contract between SingTel and service providers in India like Airtel, Vodafone, Reliance etc., and the agreement between SGIPL and SingTel is on a principal-to-principal basis. Indeed, SGIPL has entered into separate contracts with the telecom operators in India but on its own account and not as in the nature of a broker or agent for SingTel.
The High Court also observed that the agreement envisages that SGIPL has to provide, at its own expense, all necessary infrastructure in order to provide the services to SingTel and its customers. It further envisages that SGIPL shall raise invoices upon SingTel in US dollars for the services rendered on a monthly basis and on such transfer prices as may be agreed upon from time to time.
On a careful perusal of the terms and conditions of the Agreement between SingTel and SGIPL, the bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that there is no legal infirmity or irrational approach adopted by the CESTAT when it came to conclude that SGIPL is not providing “intermediary services”. Thus, entitled to CENVAT credit refund. Subsequently dismissed the appeals of the revenue.
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