In SERTA 7/2023 -DEL HC- Delhi High Court provides relief to BlackBerry India, rules the Company is not an ‘Intermediary’ under Place of Provision of Services Rules
Justice Vibhu Bakhru & Justice Amit Mahajan [12-07-2023]

Read Order: Pr. Commissioner, Central Excise and CGST-Delhi South V. Blackberry India Private Limited

Chahat Varma

New Delhi, August 10, 2023:  In a significant decision, the Delhi High Court has provided relief to BlackBerry India Private Limited, ruling that the company was not functioning as an intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012. The Court found that BlackBerry India's services to BlackBerry Singapore were not aimed at facilitating services from another supplier. Instead, BlackBerry India operated as an independent service provider, rendering various services without acting as an intermediary.

Brief background of the case was that BlackBerry India, filed claims for a refund of unutilized CENVAT Credit amounting to INR 8,55,34,345. The credit was accumulated from various input services used by BlackBerry India to provide Business Auxiliary Services. The company claimed that its output services were exported to overseas clients. However, the Adjudicating Authority issued a Show Cause Notice proposing to reject the claim, arguing that BlackBerry India acted as an intermediary. the Adjudicating Authority deemed their services as Business Auxiliary Services and taxable for the period before July 1, 2012. They referred to the agreement with BlackBerry Singapore Pte Ltd. and concluded that BlackBerry India's services fell under the definition of intermediary services as per Rule 2(f) of the Place of Provision of Services Rules, 2012. However, in appeal, the CESTAT held that BlackBerry India was not an intermediary and did not act as an agent or facilitate services in question. They disagreed with the Adjudicating Authority's exclusion of services under Section 65(105) (zzb) of the Finance Act, 1994, from the scope of export of taxable services under Rule 3(1) of the Export of Services Rules, 2005.

The bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan noted that as per the definition of 'intermediary' under Rule 2(f) of the Place of Provision of Services Rules, an intermediary's role was limited to arranging or facilitating the provision of services from another supplier. However, in the present case, BlackBerry India was not acting as an intermediary as it was an independent service provider. BlackBerry India was required to render promotional and marketing services, technical marketing assistance, and other related services independently, without arranging or facilitating these services from another supplier. 

The bench further scrutinized the interpretation made by the Adjudicating Authority regarding the exclusion of services covered under Section 65(105) (zzb) of the Act from the scope of Export of Taxable Services under Rule 3(1) of the Export of Service Rules, 2005. The bench disagreed with the Adjudicating Authority's conclusion and found it to be erroneous. The bench supported the CESTAT's interpretation, which stated that all services, except those specifically mentioned in Rule 3(1) of the Export of Services Rules, 2005, fell within the ambit of Export of Taxable Services.

With the above observations, the bench found that the present petition did not raise any substantial question of law. Consequently, the appeal was dismissed.