While granting relief to M/s Gupshup Technology India Pvt. Ltd, the CESTAT Mumbai bench allowed Cenvat Credit of input services used for SMS Aggregator Services provided to Facebook holding that the same constitute ‘Export of Service’ as per Rule 5 of Cenvat Credit Rules,2004.
Assessee, M/s Gupshup Technology India Pvt. Ltd, engaged in providing Business Support Service. It provide the SMS Aggregator services to M/s Facebook within India under an agreement as per which the bills were raised to M/s Facebook, Ireland and the amount was received in convertible foreign currency.
The department rejected the refund applications filed by the assessee towards refund of unutilized cenvat credit of input services used for export of services by finding that the services of BSS provided by the Respondent to M/s Facebook does not qualify as export of service.
The Revenue contended that in the present case, both the service provider and service recipient are located in India and accordingly as per Rule 3 of Place of Provision of services Rules(POP), the place of provision of service is the location of service recipient of service. It was therefore, concluded that since the actual service recipient i.e the subscribers whose SMSs are being sent or received are located in India and the Respondent is also located in India, it is not an Export of Service and not liable for refund of cenvat on Input Services.
The CESTAT bench overruled the above contentions of the department for the reason that the services are not provided to any Indian Subscriber by the Respondent. It was noted that the assessee has no connection/ interaction or relation with the Indian subscribers of Facebook. “The services are provided under the terms and conditions of the agreement made between M/s Facebook Ireland and the Respondent. The Respondent is not charging any service charges or part thereof from the Indian subscribers.”
It was also noted that the Respondent is working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs.
Further, there is no contractual agreement between the subscribers of Facebook and Respondent. “The fee is charged to Facebook and the Respondent has no control over the SMSs to be sent or received. The subscriber of Facebook are not even aware the existence of Respondent and the type of services rendered by the Respondent.”
While dismissing the appeal, the Tribunal concluded that Rule 3 POP do not applicable in the present case. “If the revenue considered the services of Respondent as having not been rendered to outside taxable territory, it should have issued demand notice to the Respondent for service tax on bills raised by them to M/s Facebook. Having choosen not to do so, the revenue accepts that the services has been rendered to party situated outside India being falling under the category of Export of Service and is not taxable. Hence in such case the rejection of claim under consideration is not correct,” the bench added.
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