Blackberry India Private Limited Vs Commissioner of Central Tax/Excise (CESTAT Delhi)
CESTAT Delhi held that appellant is not involved in the arrangement/ facilitation of the supply of service and hence the appellant is not intermediary. The service provided by the appellant qualify for export and accordingly refund admissible under rule 5 of the Cenvat Credit Rules, 2004
Facts-
This appeal has been filed by M/s. Blackberry India Pvt. Ltd. (formerly known as Research in Motion India Private Limited) to assail the order dated 18.08.2021 passed by the Commissioner (Appeals-II) Central Tax/Excise, Delhi that upholds the order dated 31.08.2020 passed by the Assistant Commissioner. The refund claim filed by the appellant under rule 5 of the CENVAT Credit Rules 2004 was rejected by the Assistant Commissioner for the reason that the appellant had acted as an ‘intermediary’ between the service provider and the service recipient.
Conclusion-
An intermediary is a person who arranges or facilitates provision of the main service between two or more persons. The appellant is not involved in the arrangement or facilitation of the supply of service. The service provided by the appellant qualify for export since it is providing services to Blackberry Singapore, which is outside India and is receiving convertible foreign exchange for such The appellant is not privy to the Agreement entered into between Blackberry Singapore and its end customers. Merely because the appellant is charging Costs Plus on Blackberry Singapore would not mean it is an intermediary.
Chandigarh Bench of the Tribunal in Service Tax Appeal No. 61877 of 2018 has held that the intermediary does not include the person who supplies such goods or services or both on his own account. Therefore there is no doubt that in cases wherein the person supplies the main supply either fully or partly, on principal to principal basis, the said supply cannot come within the ambit of “intermediary”.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed by M/s. Blackberry India Pvt. Ltd.1 (formerly known as Research in Motion India Private Limited) to assail the order dated 18.08.2021 passed by the Commissioner (Appeals-II) Central Tax/Excise, Delhi2 that upholds the order dated 31.08.2020 passed by the Assistant Commissioner. The refund claim filed by the appellant under rule 5 of the CENVAT Credit Rules 20043 was rejected by the Assistant Commissioner for the reason that the appellant had acted as an ‘intermediary’ between the service provider and the service recipient.
2. The appellant is a company incorporated in India and is engaged in the provision of marketing, administrative and support service to Blackberry Singapore in relation to Blackberry products. For this purpose, the appellant entered into an Agreement dated 03.09.2006 with Blackberry Singapore. It needs to be noted that ‘Research in Motion India Private Limited’ is now known as ‘Blackberry India Private Limited’ and ‘Research in Motion Singapore Private Limited’ is now known as ‘Blackberry Singapore Private Limited’.
3. The relevant clauses of the Agreement dated 03.09.2006 are reproduced below:-
“THIS AGREEMENT is effective as of the date specified in Schedule “A” (the “Effective Date”).
BETWEEN:
RESEARCH IN MOTION SINGAPORE PTE., a company organized under the laws of Singapore having its registered office at I International Business Park, # 02-11/12, The Synergy Building, Singapore, 609917 (“RIM”)
AND:
RESEARCH IN MOTION INDIA PRIVATE LIMITED, a company registered in India and having its registered office at F-40, N.D.S.E Part 1, New Delhi, India, 110049 (“Service Provider”)
WHEREAS:
A. RIM distributes certain products and services, including the BlackBerry solution, which includes handheld devices, accessories, software, and related services (together with the associated proprietary and intellectual property rights) (the “RIM Solution”).
B. Service Provider and RIM became parties to a Marketing Activities Agreement effective September 3, 2006, as amended and restated effective as of March 4, 2007 (the “Amended & Restated MAA”), whereby service Provider performs various promotion and marketing services as more particularly set out in Schedule A hereto or as otherwise requested by RIM from time to time (the “Services”).
C. RIM and Service Provider desire to amend and restate the terms and conditions of the Amended & Restated MAA as hereinafter set forth.
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3.3 Services.
The scope, quality and timeliness of the Services offered and provided by Service will conform to the guidelines that RIM and Service Provider may agree and establish from time to time.
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3. RIM’s Assistance.
RIM will provide Service Provider, at Service Provider’s request, with promotional and technical materials, training and assistance to perform the Services, including, but not limited to, access to the product, marketing and business development groups to help Service Provider perform the Services. Service Provider acknowledges that RIM may subcontract third party service providers to provide any such materials, training or assistance, in whole or in part. RIM will be entitled to charge Service Provider for such materials, training and assistance in accordance with RIM’s then-current standard policies and rates. The training will be offered at the facility that RIM may designate. Unless otherwise agreed, Service Provider will bear all shipping, travel, lodging and other out-of-pocket expenses that may be incurred in providing such promotional and technical materials, training and assistance.
Article 4
Fees and Payment
4.1 Cost Plus Payments.
In exchange for providing the Services, RIM will pay to Service Provider a fee equal to the sum of all costs and expenses that Service Provider incurred in providing such Services (the “Costs”), plus the percentage or other fee set out in Schedule A (the “Cost Plus Fee”). Where applicable, taxes (as defined in Section 4.4) shall be added to the Cost Plus Fee and Approved Reimbursements. In respect of the period of time from the Effective Date to the commencement of the initial fiscal quarter or other period specified in Schedule A (the “Cost Period”) and, thereafter, in respect of each Cost Period, Service Provider will submit an invoice that sets forth the Cost Plus Fee that is due and payable for the Services that have been rendered in that Cost Period and will separately identify those Services which are subject to taxes (as defined in Section 4.4) and those which are not. RIM will pay the Cost Plus Fee and any applicable taxes to Service Provider within forty-five (45) days after receipt of such invoice.
The Cost Plus Fee shall be reviewed by the parties on an annual or other basis as determined by the parties from time to time.
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4.3 Charges for Assistance.
RIM may submit a monthly invoice to Service Provider that sets forth the charges for the licenses, access, materials, training and assistance that RIM may have provided to Service Provider during the month then-ended in connection with the Services. Service Provider will pay each such invoice to RIM within forty-five (45) days after receipt thereof or, at RIM’s request, Service Provider may offset against such amounts owing in respect of the Services.
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8.3 Status of Parties.
Service Provider and RIM are independent parties. Nothing in this Agreement will be construed to give either party the authority to direct or control the daily activities of the other party; or constitute the parties as employer and employee, franchisor and franchisee, partners, joint venturers, co-owners or otherwise as participants in a joint undertaking. Service Provider has no right or authority to assume or create any obligation of any kind, express or implied, on behalf of RIM, or waive any right, interest or claim that RIM may have against any other person.”
(emphasis supplied)
“SCHEDULE A
1. Service:
The Services are:
