Identifying Buyers for Foreign Client Is Export of Service, Not Intermediary: CESTAT Allahabad

Commissioner Vs U. V. Graphics Technologies Pvt. Ltd. (CESTAT Allahabad)

The Revenue filed an appeal against Order-in-Appeal No. NOI-EXCUS-001-APP-800-20-21 dated 16.10.2020, whereby the Commissioner (Appeals), Central Goods & Service Tax, Noida, upheld the order of the Original Authority dropping the service tax demand raised against the respondent by treating the services provided to its overseas clients as export of services.

The respondent had entered into an agreement with its overseas client for identifying prospective customers for the sale of the client’s goods. After identifying and introducing prospective buyers, all subsequent dealings relating to the sale of goods, including execution of sale agreements, supply of goods and receipt of payment, were undertaken directly between the overseas supplier and the Indian buyers. The respondent maintained that it had no role in these subsequent transactions.

Pursuant to an audit objection, a show cause notice was issued treating the respondent as an intermediary and applying Rule 9 of the Place of Provision of Services Rules, 2012, on the basis that the services were supplied in India, thereby denying the benefit of export of services. The proceedings arose from a statement of demand issued consequent to an earlier show cause notice covering the period 2013-14 to 2014-15. The Original Authority dropped the demand, and the Commissioner (Appeals) upheld that order. The Revenue thereafter preferred the present appeal before the Tribunal.