ST - POPS, 2012 cannot be applied to refund being claimed in terms of Rule 5 of CCR, 2004 and to interpret export of service: CESTAT
By TIOL News Service
MUMBAI, JUNE 19, 2018: THE Appellant rendered 'Consulting Engineer Services' to its parent company M/s Holtec International, USA.
They filed refund claims u/r 5 of the CCR, 2004 r/w Rule 6A of the STR, 1994 in respect of the CENVAT Credit paid on input services used in providing output services.
The refund claim was rejected by the original authority on the ground that since M/s Holtech International has taken registration on 02/07/2015 at Wakad, Pune, hence as per definition of ‘service recipient' in Rule 2(i) of POPS Rules, the location of service recipient is premises for which such registration has been obtained i.e. India; that as both service provider and service recipient are located in India as per Rule 8 of POPS Rules, 2012, the place of provision of Services shall be the location of service recipient of service. Inasmuch as since the conditions (b) and (d) of Rule6A of STR Rules has not been satisfied, therefore, the impugned service does not qualify as export of service, the Revenue contended.
An appeal before the Commissioner(A) also met a similar fate.
Submissions by Appellant:
In appeal before the CESTAT, the appellant submitted that M/s Holtech International is having a Project office in India for rendering services solely to NTPC for their 2x800MW Lara Super Thermal Project received from BGR Energy Systems Ltd. Furthermore, they (appellant) had not rendered any services directly or indirectly related to M/s NTPC contract. In the present case admittedly the person who is contracted for service is Holtech international USA and the payment is also received from them in foreign exchange. The registration of Holtech International USA project office in India with the service tax department shall not have any bearing on the services provided by Appellant to Holtech International, USA and will continue to qualify as Export of service. As per the RBI Regulations, any project office is opened for the specific purpose only and cannot carry out any other business other than the purpose for which RBI has given permission to open the project office. The project office of M/s Holtech International USA was opened to supply goods and provide services to the customer - BGR Energy Systems Ltd who had placed the purchase order dt.15.10.2013 on Holtech International USA .
Inasmuch as the reliance on Rule 2(i)(a) of the Place of Provision of Service Rules, 2012 is misplaced since the lower authorities have simply relied upon the words ‘place of registration' without giving any cognizance to the word “the recipient of service” used in the said rule.
The Appellant did not provide any service in the project office in India which has been confirmed by an independent chartered Accountant's Certificate, therefore, denial of export status to the appellant on the basis of above contention is incorrect.
The AR reiterated the findings of the impugned orders and submitted that since M/s Holtech International USA has office in India, therefore, the services cannot be said to have been rendered outside India.
The Bench considered the submissions and after making a mention that it was not in agreement with the interpretation made by the lower authorities further observed -
++ The Place of Provision of Services Rules, 2012 cannot be applied to the refund being claimed in terms of Rule 5 of Cenvat Credit Rules and to interpret the export of service. In the present case the services were rendered to service recipient who is located outside India. The Indian Project office of M/s Holtech International Ltd, USA was not at all concerned with such services. Further, in terms of Explanation 3 to Section 65B(44), different establishments located in non-taxable territory and taxable territory are to be treated as establishment of different persons.
++ It is thus clear that the office of M/s Holtech International situated in USA is different establishment from its project office in India. In the present case, it is the US establishment of M/s Holtech International, USA who has availed the services from the Appellant and, therefore, the services rendered by Appellant would clearly fall under the category of Export of Service in terms of Rule 6 A of Service Tax Rules, thereby making them eligible for refund claimed by them.
Setting aside the impugned orders, the appeals were allowed with consequential relief.
(See 2018-TIOL-1888-CESTAT-MUM)
