Refund of unutilised input tax credit disputed over export of services classification, remitted for de novo appellate examination and fresh decision.

Refund of unutilised input tax credit under the Central GST regime was contested on the ground that conditions for export of services were unmet due to the petitioner acting as an agent/intermediary of its parent; the appellate record required reassessment of contractual clauses and the applicability of departmental circulars, with specific findings to be recorded. The HC quashed the impugned order and remitted the matter to the appellate authority for de novo consideration and a fresh decision in accordance with law.

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Issues: (i) Whether the impugned appellate order dated 22 February 2022 rejecting the petitioners refund claims (on ground that petitioner acted as agent/intermediary of its foreign parent and services did not qualify as export) should be quashed and the matter remitted for fresh consideration.

Analysis: The petition challenges the appellate authority's conclusion that the petitioner acted as an agent/intermediary of its foreign parent, resulting in the place of supply being in India and disqualification of export of services for refund of unutilised input tax credit under the GST statutory scheme. The record includes the service agreement between the subsidiary and parent, provisions of the IGST/CGST Acts (including definitions and place of supply rules), and departmental circular(s) clarifying scope of intermediary and Condition (v) of Section 2(6) IGST. The impugned order applied agent/intermediary concepts and place-of-supply rules to hold services were for Indian recipients. The Court examined (a) terms of the service agreement (including cost-plus/markup, marketing, consulting, license fee apportionment, indemnity, and business relationship clauses), (b) applicable statutory definitions and place-of-supply provisions, and (c) the CBIC circular and earlier Division Bench authority which had reached a contrary conclusion on similar facts. The Court concluded that the appellate authority had not afforded a sufficiently detailed, holistic scrutiny of the agreement, the circulars applicability, and the earlier precedent; multiple factual and legal contentions remained open and required fresh, reasoned consideration by the appellate authority after hearing parties.

Conclusion: The impugned order dated 22 February 2022 is quashed and set aside and the departmental appeals are remitted to the appellate authority for de novo consideration and fresh decision in accordance with law after hearing the parties within three months.

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