Landmark GST Ruling: Intermediary Status Challenged, Case Remanded for Comprehensive Reassessment of Service Agreements and Fee Structure

M/s. Netgear Technologies India Private Limited Versus Joint Commissioner CGST Appeals I Delhi & Anr.

M/s. Netgear Technologies India Private Limited Versus Joint Commissioner CGST Appeals I Delhi & Anr. - 2023 (74) G. S. T. L. 4 (Del.) Issues involved:
The petitioner challenges an Order-in-Appeal rejecting their appeal for refund of Input Tax Credit (ITC) on the ground of being classified as an intermediary under the Integrated Goods and Services Tax Act, 2017.

Summary:
1. The petitioner, engaged in exporting services, sought refund of ITC for zero-rated supplies to Netgear Pte. Ltd. The Adjudicating Authority rejected the claim, deeming the petitioner as an intermediary facilitating services, not an independent supplier.
2. The petitioner contended that they provided marketing and sales support services independently, based on a cost-plus Agreement with Netgear Pte. Ltd. The Adjudicating Authority, however, considered the petitioner as procuring orders for Netgear, concluding that the fee paid was linked to sales made in India.
3. The petitioner argued that the fee structure in the Agreement was misunderstood, emphasizing it was on a cost-plus basis. The Court noted the lack of detailed analysis on the petitioner's actual work and remuneration basis, directing the Adjudicating Authority to reevaluate after examining the work performed.
4. The Court set aside the impugned order and remanded the matter for fresh consideration, instructing the Adjudicating Authority to review the actual work done by the petitioner and relevant documents, considering previous judgments and the need for empirical evidence in determining intermediary status.