Whether refund of Management consultancy services provided to Australian firm is allowable or not?

PJ/CASE LAW/2015-16/2981

Case:- AMP CAPITAL ADVISORS INDIA PVT. LTD. VersusCOMMR. OF S.T., MUMBAI-I

Citation:- 2015 (40) S.T.R. 577 (Tri. - Mumbai)

Brief facts:- The appeals are directed against Orders-in-Appeals No: 583/PD/14 and PD/5 84/2014 both dated 16-5-2014 passed by the Commissioner of Central Excise (Appeals) - IV, Mumbai Zone-I wherein the learned Commissioner (Appeals) upheld the order-in-original No. ANK/R-300/09, dated 17-8-2010 passed by the Asstt. Commissioner of Service Tax-I, Division I, Mumbai rejecting the refund claim of ` 6,03,801/- and rejected the orders-in-original Nos. DMD/R-149/2011, dated 30-5-2011; DMD/R-168/2011, dated 21-6-2011 and DMD/R-200/2011, dated 29-6-2011 passed by the Dy. Commissioner of Service Tax-I, Division-I, Mumbai, sanctioning refund claim of ` 3,88,025/-; ` 3,99,388/- and ` 2,60,979/- respectively.
The fact of the case is that the appellant, M/s. AMP Capital Advisors India Pvt. Ltd., are registered with the Service Tax department under the category of ‘Banking and Other Financial Services’ and ‘Market Research Agency Services’. The appellant entered into a Business Service Agreement dated 28-3-2008 with M/s. AMP Capital Australia, Sydney. As per the said agreement, the appellant is required to provide Advisory services to AMP Capital Australia. In providing advisory services AMP Capital India may be requested to:
(i)         Perform analysis with respect to investments and advise on investment opportunities in India;
(ii)        Evaluate and recommend investment opportunities and provide recommendations regarding the disposition of investments;
(iii)       Assist in preparing memoranda that may summarize and/or recommend investment opportunities in India;
(iv)       Advice on the structure of investments and dispositions of investments in India and provide non-binding advice on the negotiation of the terms and documentation;
(v)        Assist in the preparation of reports regarding performance of investments in India, and
(vi)       Perform such other duties, functions and activities as requested from time-to-time.
(vii)      And any other service that AMP Capital Investors may reasonably request from time-to-time.
The service-recipient, M/s. AMP Capital Australia used the advice received from the appellant in further advising to their customers in making investments in India. Since the appellant is providing the aforesaid services to AMP Capital (Australia), who is located in Australia, the services are covered under ‘export of services’ and accordingly the appellant has filed refund claims in respect of input services under Rule 5 of Cenvat Credit Rules, 2004 for an amounts of ` 6,03,801/-, ` 3,88,025/-, ` 3,99,388/- and, ` 2,60,979/-. After following due process of law, the adjudicating authority, in the respective orders-in-originals rejected the refund claim of ` 6,03,801/-, and sanctioned the remaining refund claims filed by the appellant. Aggrieved by the said orders, appellant filed an appeals before the Commissioner (Appeals). The learned Commissioner (Appeals), by the impugned orders upheld the order-in-original dated 17-8-2010 and rejected the orders-in-original dated 30-5-2011, 21-6-2011 and 29-6-2011 passed by the Deputy/Asstt. Commissioner, Division-I, Service Tax-I, Mumbai Commissionerate. Aggrieved by the said order, the appellant is before tribunal.

Appellant’s contention:- Shri Niren Shethia, learned Chartered Accountant for the appellant submits that the Commissioner (Appeals) held that the refund claims are inadmissible on the ground that the services provided to M/s. AMP Capital (Australia), Sydney were used in India and, therefore, the same does not qualify as ‘export of service’. In this regard he submits that the service-provider is the appellant in India and the service-recipient is located in Sydney. The services are received by Australia based entity, M/s. AMP Capital (Australia). Therefore, it is undisputed that the services provided by the appellant were used outside India. It is his submission that though the research and analysis regarding investment was carried out in India but that services are provided to Australia based entity and the recipient is an Australia based entity, i.e., M/s. AMP Capital (Australia). Therefore, there is no dispute that the services were used outside India. In support of his submission, reliance is placed on the judgment of a coordinate bench of this Tribunal in the case of Amba Research (India) Pvt. Ltd.v. Commissioner of Service Tax, final order No. 21741/2014, dated 24-9-2014. He submits that the fact of the said judgment is absolutely identical to the present case. He also placed reliance on the judgment of Commissioner of Service Tax, Mumbaiv. Greater Pacific Capital Pvt. Ltd. - 2014-TIOL-1726 CESTAT-MUM = 2015 (38)S.T.R.656 (Tri.-Mum.). He also referred to C.B.E. & C. Board’s Circular No. 111/5/2009-S.T., dated 24-2-2009 and C.B.E. & C. Circular No. 141/10/2011-TRU, dated 13-5-2011. He also relied upon the judgment of Bain Capital Advisors India Pvt. Ltd. v. Commissioner of Service Tax, Mumbai-I, Final order Nos. A/1665-1669/14/CSTB/C-I.

Respondent’s contention:- Shri A.B. Kulgod, learned Asstt. Commissioner (AR) appealing on behalf of the Revenue reiterates the findings of the impugned order.

Reasoning of Judgment:- They have carefully considered the submissions made by both the sides. The issue to be decided by them in this case is whether the services provided by the appellant, M/s. AMP India Capital Advisors (India) Pvt. Ltd. to M/s. AMP Capital (Australia) is ‘export of service’ or otherwise and consequently eligibility to refund. As per the facts, the appellant is providing management consultancy services such as providing reports of information on investment area, industries, companies, non-binding advisory service in respect of potential investment and investment opportunities in India, the research analysis and identification of investment opportunities providing necessary reports, information and feedback in connection with the performance of investment in India and other non-binding advisory service to M/s. AMP Capital (Australia) which is located in Australia. It is undisputed that the appellant is receiving the remittance in convertible foreign exchange towards fees of their services. The services, though related to the analysis carried out in India, but the services are provided to Australia based firm M/s. AMP Capital (Australia). These services are not provided to any person located in India and nobody in India is concerned about the services. Since the services are provided to Australia based firm it is that firm, M/s. AMP Capital (Australia) who is the sole recipient of’ the services and on the basis of these services, M/s. AMP Capital (Australia) is further providing services to the foreign based companies. That shows, that the services provided by the appellant is consumed by M/s. AMP Capital (Australia), Australia for providing his output services to foreign based companies. Under these facts there is no dispute that the services provided by the appellant are indeed used and consumed by M/s. AMP Capital (Australia) in Australia. Therefore, the services are used outside India.
On the identical set of facts, this Tribunal in the following cases have held as under :
(i) In the case of Amha Research (India) Pvt. Ltd.:
“3. On going through the records and after considering the submissions of both sides, we find that in this case, the appellant is a subsidiary of M/s. Amba Holdings Inc. The refund claim has been denied on the ground that the services have been entirely utilized in India. According to the agreements, we find that the buyer namely M/s. Amba Holdings Inc. is engaged in the business of providing services in investment research, outsourcing of financial analysis and sub-contracting services. It was the submission of the learned Consultant that the services provided by the appellant in the form of studies and submission of reports which are in turn provided by the Amba Holdings Inc. to their customers abroad. It is not the case where the benefits of research are used by the buyer in India as assumed by the lower authorities.
4. On going through the impugned order, we find that there is absolutely no evidence for the conclusions reached by the lower authorities that investment and research services have been used in India only. The learned Commissioner has simply stated that on going through the agreement this is what he finds. He has not quoted paragraph of the agreement which is relevant and where exactly it emerges from the agreement that services are lo be used in India. Moreover, as per Circular, issued by the Board in 2009 and considered in the Interim Order (supra), if the beneficiary is located outside, refund is admissible. It is not the case of the Revenue that consideration has not been received in foreign currency. We also find that this Tribunal in the case of CST, Mumbaiv. M/s. Greater Pacific Capital Pvt. Ltd. [2014-TIOL-1726-CESTAT-Mum] in similar circumstances came to the conclusion that refund is admissible. Accordingly, we consider that the appellant has made out a case for eligibility for refund. Therefore appeal is allowed with consequential relief to the appellant.”
(ii) Commissioner of Service Tax, Mumbai v.Greater Pacific Capital Pvt. Ltd.
“9. In this case the issue is to be decided whether the services provided by the respondent to GPC located outside India qualifies as export of service as per Rule 3(1)(iii) read with Rule 4 of the Export of Services Rules, 2005 or not and consequently, whether the respondent is entitled for refund claim or not.
10. It is an admitted fact that the respondent has provided investment advisory service to GPC Management located outside India and does not have any business in India. It is also not in dispute the respondent has received the payment in convertible foreign exchange. Therefore, as per Rule 3(l)(iii) of the above said Rule, the services provided by the respondent not qualifies as export of service as the service provided by the respondent to a service recipient located outside India and are to be used outside India for their benefit. Further, I find that the issue came up before this Tribunal in the case of Paul Merchants Ltd. (supra) and in that case also this Tribunal has held that if the services recipient is located outside India and the same has been utilized outride India, therefore it is a case of export of service. Further in the case of Vodafone Essar Cellular Ltd.- 2013 (31)S.T.R.738this Tribunal held that telecom services provided to inbound roaming international consumers would qualify as export of service. In the said case, Vodafone provided telecom services in India to international in-bound roamers registered with foreign telecom network operators but located in India at the time of providing of the said services. In that case this Tribunal held that Vodafone rendered the telecom service, in the context of international roaming, the benefit accrued to the foreign telecom service provider, though the actual consumer was in India but in that case it was held that it is a support service. In the instant case, the respondent has provided investment advisory services to GPC who is located outside India and having no office in India. In that case it is held that it is a case of export of service. In the circumstance, the respondent is entitled for the refund claim. Accordingly, I do not find any infirmity with the impugned order and the same is upheld. As the appeals filed by the Revenue Reserves no merit are therefore, dismissed. Stay application is also disposed of in the above terms.”
In view of the above judgments it is found that the services were carried out in India but the recipient is outside India and, therefore, the services provided by Indian entity deemed to be used by the person located outside India and, therefore, it satisfies the terms used “outside India” as provided under the Export of Service Rules. Therefore, following the ratio of the above judgments it is absolutely undisputed that the appellant has provided the services from India and the same was used outside India. Accordingly it qualifies as ‘export of services’ and refund is admissible.
In view of their above discussion, they are of the considered view that the appellant is rightly entitled for the refund holding that the services provided by the appellant is export of services. Hence the impugned orders are not sustainable and the same is set aside. The appeals of the appellant are allowed.

Decision:-Appeals allowed.

Comment:- The analogy of the case is that Management consultancy services provided to Australian firm and remittances is received in convertible foreign exchange towards fees of services. Services are used and consumed in Australia for providing output services to foreign based companies. Such services are although carried out in India but sole recipient is outside India. Since services provided deemed to be used by person located outside India, it satisfies terms used “outside India” as provided under Export of Services Rules. Services qualify as ‘export of services’. Therefore refund is admissible.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2981

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