William E Connor and Associates Sourcing Private Limited Vs Commissioner of Central Goods & Service Tax (CESTAT Chandigarh)
The appeal before CESTAT Chandigarh challenged the Order-in-Original dated 30.03.2022 passed by the Commissioner, CGST, Gurgaon, confirming a service tax demand of Rs. 5,93,92,952 along with interest and penalty for the period April 2016 to June 2017. The appellant, a subsidiary of William E. Connor and Associates Ltd., Hong Kong (WECA HK), provided support services to WECA HK, including market research for potential vendors, verification of sample products, attendance at pre-production meetings, tracking of shipment status, and related activities. The appellant treated these services as export of services and did not pay service tax. The Department took the view that the services were provided in India and, under the Place of Provision of Services Rules, 2012 (POPS Rules), could not qualify as exports. A show cause notice dated 22.10.2021 was issued, and the proposals were confirmed by the adjudicating authority.
The appellant submitted that the impugned order travelled beyond the show cause notice by confirming the demand on the ground that the appellant was an “intermediary”, whereas the show cause notice had proposed denial of export benefit under Rule 4 of the POPS Rules. It further contended that statements relied upon in the impugned order were not examined in accordance with Section 9D(1)(b) of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and that the statements had been recorded under Section 70 of the CGST Act. The appellant also argued that the show cause notice simultaneously invoked Rules 4 and 9 of the POPS Rules, although Rule 14 required determination under the Rule occurring later where more than one Rule could apply. It submitted that neither Rule 4 nor Rule 9 applied, that it was neither a broker nor an agent, did not arrange or facilitate services between two or more persons, and rendered support services to WECA HK on a principal-to-principal basis. It further relied on the agreements executed with WECA HK, which expressly provided that it had no authority to contract on behalf of WECA HK, create obligations for WECA HK, or act in a principal-agent relationship. The appellant also submitted that the Department had not disputed the export treatment of the same services for the earlier period July 2015 to March 2016 and contended that the extended period of limitation was not invocable as the issue involved interpretation of legal provisions.
