2022 (7) TMI 645 - HC - GST

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

Vodafone Idea Limited Versus The Union of India through Secretary, Department of Revenue, New Delhi, The Commissioner of CGST and C. Ex Mumbai, The Deputy Commissioner Division VIII, CGST & C. Ex. Mumbai, The Assistant Commissioner Division VIII, CGST & C. Ex. Mumbai

Bombay HC held that telecom services provided by a company to Foreign Telecom Operators (FTOs) for international roaming and long distance services ... Levy of IGST - Export of services or not - telecom services - Place of supply - Vodafone Idea Limited provides, inter-alia, the services in the nature of international Inbound Roaming Services (IIR) and International Long Distance (ILD) Services to Foreign Telecom Operators (FTOs) - Section 16(3) of the IGST Act - whether provisions of Section 13(2) or Section 13(3) of IGST is applicable to the present case? HELD THAT:- Section 13(2) refers to the place of supply of services as the location of the recipient of services except in cases of Sub-section (3) to (13) of Section 13. Section 13(3) identifies the place of supply of services as the location where the services are actually performed. The provision of section 13(3)(b) is applicable in the case where services are supplied to an individual as Section 13(3) (b) starts with the words 'service supplied to an individual' - in the instant case the said services were supplied to FTO and not to an individual. The FTO had supplied services to their subscriber (individual). Here, the supplier of services is Vodafone Idea Ltd and the recipient of the service is FTO as discussed above. Further, Vodafone Idea Ltd has no idea of subscribers of FTO and therefore question of supplying service to an individual (subscribers) does not arise. Vodafone Idea Ltd had issued invoices to FTO and not to any individual which substantiates that services were not provided to an individual. Vodafone Idea Limited has provided services to FTOs and not to the individual subscribers of FTOs. Therefore Section 13(3)(b) is not attracted. Section 13(3)(b) on which reliance has been placed by the Deputy Commissioner is not applicable. Place of supply of services - HELD THAT:- As per Section 13(2) of the IGST, the place of supply of services, except the services specified in sub-sections (3) to (13), shall be the location of the recipient of services - Vodafone Idea Limited has not supplied services specified in sub-sections (3) to (13) of Section 13. Therefore, the place of service or supply of service supplied by Vodafone Idea Limited is the location of recipient of the service, i.e., location of the FTO, which is outside India. Petition filed by the Revenue dismissed. Issues Involved1. 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 AnalysisIssue 1: Implementation of the Refund Order Dated 18.08.2021Vodafone 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 ActVodafone 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 ServicesThe 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 ServicesVodafone 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.ConclusionThe 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.