The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in the case of M/s. CDP Real Estate Advisory India Pvt. Ltd. v. C.E.E., Delhi held that where services were carried out in India but the recipient of such services is outside India, the services provided by Indian entity is deemed to be used by the person located outside India. Also, advisory services pertaining to investment opportunities would fall within the meaning of “Management of Business Consultant Service” (MBCS).
The appellant-assessee registered with the Service Tax Department for providing the services under the taxable category of MBCS, etc. The assessee company entered into the agreement with Quebec Inc., Canada which is located outside India to provide investment advisory services in India to its clients in relation to companies in India.
The issue before the Tribunal was that whether the activities of the assessee company would come within the purview of MBCS as claimed by it, or within “Real Estate Advisory Service” (REAS), as held by the lower authorities and whether, the appellant should be entitled to the refund benefit under Rules 5 of the Cenvat Rules, 2004 R/w Export of Service Rules, 2005.
The department contended that the assessee company was engaged in rendering the services under the category of REAS and not MBCS.
The Tribunal constituting Hon’ble Mr. S.K. Mohanty, member (judicial) and Hon’ble Mr. B. Ravichandran, member (technical), after hearing both the parties elaborated that the assessee’s task was mainly confined to providing of advisory services in respect of investments identified by overseas client and advise it with respect of investment opportunities in the companies, who are engaged in developing the real estate projects. Hence, the Indian company is clearly covered by the definition of MBCS.
The Tribunal by citing its decisions went on to detail of the matter. It discussed the cases having facts where analysis is being carried out in India but the services are being provided outside India. It held that “if the beneficiary is located outside, the refund is admissible.”
“After going through the agreement, we are of the view that the appellant rendered the services to the overseas client as advisor of the investment opportunities in the Indian company, which is clearly covered within the definition of MBCS.”
The Tribunal pronouncing in favor of the assessee holding that the appellant is entitled to the refund benefit.
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