Refund claim for export of services and intermediary classification remanded after deficient findings on third-party role and place of supply

Dispute over denial of refund for purported export of services examines whether supplies were intermediary services or exports and whether place of supply rules were correctly applied. The authorities relied on a contractual clause to characterize the supplier as an intermediary without recording findings on existence of any third party between the transacting parties or whether supplies were made by the supplier on its own account; they also failed to identify any arrangement of facilitation distinct from the main supply. For these reasons the impugned orders were set aside as exhibiting non-application of mind and the matter remanded for fresh adjudication.

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Issues: (i) Whether the impugned appellate orders dated 12.12.2023 holding the petitioner to be an "intermediary" and denying export status, and the refund sanctioning authority's rejection dated 09.07.2024 founded on those orders, are sustainable; (ii) Whether the matter requires fresh consideration by the authorities in view of absence of findings on existence of a third party and other prerequisites for intermediary services.

Issue (i): Whether the impugned orders concluding that the petitioner's supplies are intermediary services and not exports are sustainable.

Analysis: The Court examined the appellate and sanctioning authorities' reliance on clause (C) of the agreement to characterise the petitioner as an intermediary and noted that the authorities did not record any finding establishing the existence of a third party, did not identify two distinct supplies (main and ancillary), nor did they determine that the petitioner merely arranged/facilitated a main supply rather than supplying on its own account. The authorities also failed to grapple with documentary material already filed by the petitioner and the requirements under Section 2(13), Section 2(6) and Section 13 of the IGST Act and the CBIC guidance on primary requirements for intermediary services.

Conclusion: The Court held that the impugned orders concluding intermediary status are cryptic, suffer from non-application of mind, and are not sustainable in their present form (in favour of the Appellant).

Issue (ii): Whether the matters should be remitted for fresh decision by the appellate authority and refund sanctioning authority.

Analysis: Given the absence of explicit findings on the essential prerequisites for intermediary classification (minimum of three parties, two distinct supplies, subsidiary/agent character) and the reliance of the sanctioning authority on earlier appellate observations without independent reasoning, the Court determined that a fresh evaluation is necessary. The Court directed the authorities to decide the appeals/applications after proper consideration of the record and documents, within a reasonable time frame (preferably within 12 weeks).

Conclusion: The Court set aside the impugned orders and remanded the matters to the appropriate authorities for fresh consideration (in favour of the Appellant).

Final Conclusion: The impugned appellate orders dated 12.12.2023 and the refund rejection dated 09.07.2024 are set aside for lack of adequate findings on whether the services rendered were intermediary in nature; the matters are remitted to the authorities for fresh decision after examining the record and documents, and the writ petitions are allowed.

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