M/s. CDP Real Estate Advisory India Pvt. Ltd. Vs C.C.E. (CESTAT Delhi)
These appeals are directed against the impugned order dated 19.09.2013 passed by Commissioner of Central Excise (Appeals), New Delhi.
2. Brief facts of the case are that the appellant is registered with the service tax Department for providing the services under the taxable category of “Management or Business Consultant Service” (MBCS), “Business Auxiliary Service” (BAS), etc. During the disputed period, the appellant entered into agreement with Quebec Inc., Canada, which is located outside India and is inter-alia, engaged in the business of providing investment advisory services in India to its respective clients in relation to companies in India. For providing the services, the appellant was receiving service fee in convertible foreign exchange. The appellant filed refund claim applications for the period from October 2009 to September 2010, claiming refund of cenvat credit lying un-utilized in its books of accounts. The refund applications were filed on the ground that it has used input services in providing the output service namely, MBCS, which were exported outside the country to its overseas clients. The refund claims were filed under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006 C.E. (N.T.) dated 14.03.2006. The Department initiated show cause proceedings against the appellant, proposing to reject the refund claim of Rs. 5,27,189/-, on the ground that the appellant was engaged in rendering the service under the category of “Real Estate Advisory Service” (REAS). It has been alleged that the appellant rendered the service in respect of the properties situated in India and therefore, the services cannot be treated as export of service. The adjudicating authority had rejected the refund claim under Rule 5 of the Cenvat Credit Rules, holding that the services provided by the appellant are classifiable as REAS instead of MBCS, as claimed by the appellant and therefore, the benefit under the Export of Services Rules, 2005 cannot be granted. By the impugned order, the ld. Commissioner (Appeals) has rejected the appeals filed by the appellant and upheld the adjudication order.
3. Heard both sides and perused the records.
4. The issue involved in these appeals for consideration by the Tribunal is, as to whether, the activities of the appellant would come within the purview of MBCS and BAS, as claimed by the appellant; or under the category of REAS, as held by the lower authorities and that whether, the appellant should be entitled to the refund benefit under Rules 5 of the Cenvat Rules, 2004 read with Export of Services Rules, 2005. For the purpose of proper appreciation of the case, the relevant statutory definitions of “REAS” and “MBCS” contained in the Finance Act, 1994 are reproduced below:-
Section 65(88): “real estate agent” means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant;
Section 65(89): “real estate consultant” means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate;
Section 65(65): “”management or business consultant” means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management.
6. For ascertaining the nature of services provided by the appellant and their classification under appropriate taxable category, it is required to discuss the contents of the agreement entered into between the appellant and the overseas client M/s.Quebec. The relevant clause in the contract is extracted herein below:-
“SCHEDULE A
SCOPE OF SERVICES
CDPREAL will provide advisory services to the Client in connection with the Client‟s investments in companies developing real estate projects. In particular such services will include identifying investment opportunities, analysing and advising on the real estate markets, providing financial analysis/update on the investment opportunities identified, assistance for conducting due diligence, identifying opportunities to exit the Companies etc.
Further, CDPREAL will assist the Client for providing reporting services in relation to the Client‟s existing and future investments in Companies developing real estate projects. In particular, such services will include review an reporting on the following aspects:
