Facts of the Case

  • BlackBerry India Private Limited filed refund claims totaling ₹8.55 crore for unutilised CENVAT credit for specified periods.
  • The credit arose from input services like manpower, legal consultancy, and security services used in providing Business Auxiliary Services.
  • Services were rendered to BlackBerry Singapore, claimed as export of services.
  • The Adjudicating Authority rejected the refund, alleging:
    • Services were intermediary services
    • Place of provision was in India
  • Appeals before Commissioner (Appeals) failed, but CESTAT allowed the refund. 

Issues Involved

  1. Whether services provided by BlackBerry India to BlackBerry Singapore constitute “intermediary services” under Rule 2(f) of the Place of Provision of Services Rules, 2012.
  2. Whether the respondent is entitled to refund of service tax / CENVAT credit on such services treated as export.

Petitioner’s Arguments (Revenue)

  • BlackBerry India acted as an intermediary facilitating services between BlackBerry Singapore and customers in India.
  • Therefore, place of provision is India (Rule 9), making services taxable.
  • Refund of CENVAT credit is not permissible.

Respondent’s Arguments (BlackBerry India Pvt. Ltd.)

  • Services were provided on principal-to-principal basis, not as an intermediary.
  • The company rendered marketing and support services independently.
  • No facilitation or arrangement between third parties existed.
  • Services qualified as export of services, thus eligible for refund.

Court Findings / Judgment

1. Not an Intermediary

  • The Court upheld CESTAT’s finding:
    • No agency or brokerage relationship existed
    • Services were rendered independently
    • No involvement in supply between third parties
  • The arrangement was strictly principal-to-principal

2. Interpretation of “Intermediary”

  • Intermediary requires:
    • Minimum three parties
    • Facilitation of main supply
  • BlackBerry India provided services on its own account, not facilitation

3. Export of Services Valid

  • Services qualified as export under Rule 3 of Export of Services Rules, 2005
  • Adjudicating Authority misinterpreted exclusion under Section 65(105)(zzb)

4. Reliance on Precedents

  • Court relied on:
    • M/s Ernst and Young Ltd. v. Additional Commissioner
    • M/s Ohmi Industries Asia Pvt. Ltd. v. Assistant Commissioner

5. Final Order

  • No substantial question of law arose
  • Appeal dismissed

Important Clarifications by Court

  • A service provider acting on principal-to-principal basis cannot be treated as an intermediary.
  • Two-party transactions cannot qualify as intermediary services.
  • Export benefits cannot be denied merely by labeling services as intermediary without factual basis.
  • Clarified alignment of Service Tax and GST interpretation of intermediary services.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB12072023SERTA72023_172721.pdf

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