Call Centers Providing Direct Services Are Not Intermediaries Under Service Tax: CESTAT [Read Order]

Teleperformance Global Services Pvt. Ltd., the appellant, is engaged in providing call center and business process outsourcing (BPO) services to overseas clients. The company classified its services as exports and filed rebate claims for Swachh Bharat Cess paid on input services used for such exports. The original authority sanctioned most of the rebate and confirmed the services as exports under Rule 6A of the Service Tax Rules.

Tax Planning For Trusts and cooperation Societies - Click Here

On appeal, the Commissioner (Appeals) remanded the case for re-examination, raising doubts over the nature of the services and suggesting they might be intermediary services, which are not considered exports under service tax law. The department also raised this issue for the first time at the appellate stage, arguing that the appellant was acting as an intermediary between foreign clients and end customers.

The appellant's counsel argued that the services were provided on a principal-to-principal basis, directly to foreign clients, and not on behalf of anyone else. They pointed out that the same issue had been settled in their favor in earlier CESTAT rulings, which held that call centers and BPOs are not intermediaries if they act on their own account. The counsel also cited CBEC Circular No. 334/1/2012-TRU, which clarified that service providers acting on their own account do not fall under the definition of intermediary.

The revenue counsel argued that the appellant was facilitating services between two parties and should be treated as an intermediary. They supported the remand order and sought reconsideration of the export status of the services.

The single-member bench comprising Sanjiv Srivastava (Technical Member) rejected the department’s claim. The tribunal observed that the appellant provided services independently to foreign clients and received consideration in convertible foreign exchange. It held that such services fulfilled the conditions for exports under Rule 6A and were not intermediary in nature. The tribunal found no basis to disturb the settled classification of the services as exports and stated that re-examining the issue without new facts or legal grounds was unwarranted.

How to Audit Public Charitable Trusts under the Income Tax Act Click Here

The tribunal ruled that call centers acting on their own account are not intermediaries and set aside the remand order, allowing the appeal with consequential relief.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates