The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, has held that Genpact Services LLC’s back-office and business process outsourcing (BPO) services rendered to its overseas group entity qualify as export of services and not intermediary services, thereby restoring CENVAT credit refunds amounting to ₹14.55 crore.
The bench of Justice S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), set aside the order passed by the Commissioner (Appeals), which had denied export benefits by treating the appellant as an intermediary under the Place of Provision of Services Rules, 2012.
The appeals arose from a common Order-in-Appeal dated March 31, 2021, through which the Commissioner (Appeals) had reversed the original refund sanction orders. The dispute involved refunds granted for three separate periods July 2013 to December 2013: ₹6.12 crore, January 2017 to March 2017: ₹5.01 crore and April 2017 to June 2017: ₹3.41 crore. The aggregate refund involved was ₹14.55 crore.
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The appellant/assessee is the Indian branch of the overseas entity, was engaged in providing back-office support services, call centre operations, IT helpdesk services and other business process outsourcing (BPO) services.
These services were supplied under a Master Services Sub-Contracting Agreement (MSA) executed with Genpact International Inc. (GI), USA. Under the arrangement Genpact Services LLC acted as a subcontractor to GI. It had no contractual relationship with GI’s overseas customers. Payment for services was received only from GI. The relationship between the parties was on a principal-to-principal basis.
Treating these services as exports under the Place of Provision of Services Rules, the company claimed refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules. The refund sanctioning authority accepted the claim, but the Revenue challenged the orders before the Commissioner (Appeals).
The Commissioner (Appeals) held that the appellant merely facilitated services between GI and its overseas customers and therefore qualified as an “intermediary” under Rule 2(f) of the Place of Provision of Services Rules.
Applying Rule 9(c), the Commissioner concluded that the place of provision of services was India rather than outside India. Consequently, the services were denied export status and the CENVAT refunds were rejected.
Before the Tribunal, the appellant argued that it provided services on its own account and did not merely arrange or facilitate services. GI alone was its customer, and there was no agreement with GI’s end customers. The identical issue had already been decided in favour of its group company, Genpact India Pvt. Ltd., by the Punjab & Haryana High Court.
The appellant relied upon the High Court’s judgments delivered on 11 November 2022 and 9 August 2023, where identically worded agreements had been examined and it was held that Genpact India was not an intermediary. The appellant also pointed out that the Revenue had accepted those judgments and granted refunds without filing any appeal before the Supreme Court.
After examining the Master Services Agreement, the Tribunal observed that the appellant was engaged as a sub-contractor. There was no contractual relationship between the appellant and GI’s customers. The appellant received consideration exclusively from GI. The services were rendered on a principal-to-principal basis and not as a facilitator between two parties.
Accordingly, the Tribunal concluded that the essential ingredients required for classification as an intermediary were absent.
The Bench noted that the agreements executed by Genpact Services LLC and Genpact India Pvt. Ltd. were identically worded, and the jurisdictional Punjab & Haryana High Court had already held that such services do not constitute intermediary services.
The Tribunal further observed that the Revenue had consciously chosen not to challenge the High Court judgment before the Supreme Court. CBIC Circular No. 159/15/2021 also clarifies that the concept of intermediary under the Service Tax and GST regimes is substantially similar. Therefore, the High Court’s interpretation squarely applied to the present dispute as well.
The Tribunal referred to its earlier decision in William E. Connor and Associates Sourcing Pvt. Ltd., where identical facts had been examined and it had already been held that entities providing services on their own account cannot be treated as intermediaries merely because the services ultimately benefit overseas customers.
The Bench reiterated that once the intermediary finding fails, the denial of export benefits and consequential refund cannot survive.
Allowing all three appeals, the Tribunal held that the impugned appellate order was legally unsustainable.
It restored the refund entitlement and directed that the appellant be granted all consequential reliefs in accordance with law, thereby reviving refunds aggregating ₹14.55 crore.
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