Telecom services to Foreign Telecom Operators for international roaming qualify as export under Section 13(2) IGST Act

Bombay HC held that telecom services provided by a company to Foreign Telecom Operators (FTOs) for international roaming and long distance services constitute export of services. The court determined that Section 13(2) of IGST Act applies, making the place of supply the location of the recipient (FTO) outside India, not Section 13(3)(b) which applies to services supplied to individuals. Since the company invoiced FTOs directly and had no direct relationship with individual subscribers, the services were deemed exported. Revenue's petition was dismissed.

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Issues Involved
1. Implementation of the refund order dated 18.08.2021.
2. Validity of the refund claims under the IGST Act.
3. Determination of the place of supply for telecom services.
4. Compliance with the conditions for export of services.

Detailed Analysis

Issue 1: Implementation of the Refund Order Dated 18.08.2021
Vodafone Idea Limited filed Writ Petition No. 3221 of 2021 seeking a writ of mandamus to implement an order-in-appeal dated 18.08.2021 passed by the Joint Commissioner (Appeals-II), CGST and Central Tax, Mumbai, which granted a refund of Rs. 1,02,74,14,843/-. The Revenue, on the other hand, filed Writ Petition (L) No. 12860 of 2022 seeking to quash the same order. The court decided to take up the Revenue's petition as the main petition, considering that if the Revenue's petition is admitted and a stay is granted, Vodafone Idea Limited's petition for a refund would not arise.

Issue 2: Validity of the Refund Claims Under the IGST Act
Vodafone Idea Limited provides telecom services under a license from the Government of India, including international inbound roaming services (IIR) and international long-distance (ILD) services to Foreign Telecom Operators (FTOs). The company is registered under the Maharashtra Goods and Services Tax Act, 2017 (MGST Act) and claims that these services qualify as exports under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). The company chose to export services on payment of Integrated Tax and claimed a refund thereof.

Issue 3: Determination of the Place of Supply for Telecom Services
The primary contention was whether the place of supply of services provided by Vodafone Idea Limited is within India or outside India. The Deputy Commissioner of Central GST and Central Excise Commissionerate initially rejected the refund claims, holding that the place of supply was Maharashtra and not outside India. However, the Joint Commissioner (Appeals) allowed the appeals, determining that the place of supply was outside India, making the services eligible for a refund.

Issue 4: Compliance with the Conditions for Export of Services
Vodafone Idea Limited argued that their services meet all the conditions under Section 2(6) of the IGST Act for being considered as export of services:
1. The supplier of service is located in India.
2. The recipient of service is located outside India.
3. The place of supply of service is outside India.
4. Payment for such service is received in convertible foreign exchange.
5. The supplier and recipient are not merely establishments of a distinct person.

The Revenue argued that since the customers of FTOs make calls within Maharashtra, the place of supply is within Maharashtra. However, the court noted that the contractual obligation and payment are between Vodafone Idea Limited and the FTOs, not the individual subscribers of the FTOs. The court agreed with Vodafone Idea Limited, stating that the place of supply should be determined based on the location of the recipient, which is the FTO located outside India.

Conclusion
The court dismissed the Revenue's petition (Writ Petition (L) No. 12860 of 2022) and allowed Vodafone Idea Limited's petition (Writ Petition No. 3221 of 2021), directing the respondents to implement the refund order dated 18.08.2021. The court held that the services provided by Vodafone Idea Limited qualify as export of services under the IGST Act, and the place of supply is outside India. The order is stayed until 31.08.2022 upon request by the Revenue for a stay of the judgment.

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