Delhi HC grants ITC refund for export services, rejects intermediary classification under Section 2(6) IGST Act

Delhi HC allowed the petition challenging rejection of ITC refund for export of services from December 2017 to March 2020. The petitioner was denied refund on grounds of being an intermediary, making place of supply India rather than recipient's location. The court held that services rendered were not intermediary services, noting petitioner had previously succeeded before service tax authorities on same issue and received ITC refunds for periods before December 2017 and after March 2020. Since recipients were overseas entities, services qualified as export of services under Section 2(6) IGST Act. The impugned orders were set aside.

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Issues Involved:
1. Timeliness and jurisdiction of the refund claim.
2. Filing of GSTR-1 and GSTR-3B.
3. Classification of services as export of services.
4. Submission of required documents and compliance with conditions.

Summary:

Issue 1: Timeliness and Jurisdiction of the Refund Claim
The Adjudicating Authority found that the refund claim had been filed within the stipulated time and with the correct jurisdictional authority.

Issue 2: Filing of GSTR-1 and GSTR-3B
The petitioner had filed GSTR-1 (Table-6A) and GSTR-3B for the relevant periods, as required.

Issue 3: Classification of Services as Export of Services
The core issue was whether the services rendered by the petitioner to EY Entities constituted intermediary services, which would affect the place of supply. The Adjudicating Authority and the Appellate Authority had concluded that the petitioner was an intermediary, thus placing the supply of services in India. However, the High Court disagreed, stating that the petitioner provided services directly to EY Entities and did not arrange or facilitate services from third parties. Therefore, the petitioner was not an intermediary under Section 2(13) of the IGST Act. Consequently, the place of supply was the location of the recipient (EY Entities), which is outside India, qualifying the services as export of services under Section 2(6) of the IGST Act.

Issue 4: Submission of Required Documents and Compliance with Conditions
The petitioner had submitted all necessary documents and met the conditions specified under Rule 89 of the CGST Act and Circular No. 125/44/2019-GST.

Conclusion:
The High Court concluded that the services provided by the petitioner were not intermediary services and thus qualified as export of services. The impugned orders were set aside, and the Adjudicating Authority was directed to process the petitioner's refund application expeditiously.

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