TaxTMI 
TaxTMI 
2024 (2) TMI 1121
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....n Indian Rupees. The Appellant has averred that the subscription amounts paid by their clients are paid through Pay Pal Account in US Dollars and Paypal being a payment gateway receives the amount in US Dollars and the same gets credited to CITI bank (Paypal's bankers) and CITI bank transfers the amount to HDFC bank, which is the Appellant's bank in INR after deduction of their service charges. 6(i).In this regard, the amended Para 2(k) of the Board's Circular No. 88/07/2019-GST,dated 01-02-2019 is reproduced below: 3.2 Amended Para 2(k) Realization of export proceeds in Indian Rupee : Attention is invited to para A(v)Part-I of RBI Master Circular No. 14/2015-16, dated Ist July, 2015 (updated as on 5th November, 2015), which states that "there is no restriction on invoicing of export Contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall b....
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..... 'However, since the Appellant had not produced the tax invoices, the location of the service recipient could not be ascertained to establish that the recipient of the services are located outside India and thus the condition number (ii) mentioned in Section 2(6) ibid has not been established in these cases. Thus, in the absence of invoices, the claims can certainly not be entertained. 7(i).The Appellant themselves have stated that they had submitted the following documents before the Respondent viz. RFD-01A, LUT, Letter of declaration, proof of ITC (invoice copies), copy of GSTR2A, copy of electronic credit and debit ledgers, copy of Statement 3 and copy of FIRC advice from CITI bank. Thus, it is clear that they had not provided copies of tax invoices, if any, raised by them. Also they had not produced any FIRC or BRC copies since no invoices had been raised by them. The copies of FIRC advice submitted by them from CITI bank cannot be considered as a valid document in lieu of the FIRC since it is only an FIRC advice and cannot be treated as FIRC. In fact, the bank themselves have given this declaration clearly stating that "This is an Advice and Not to construed as a....
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....ndings, the Impugned Orders are upheld in toto and the appeals of the Appellant merit rejection. 10. Appeals rejected." 3. The petitioner is engaged in the business of providing opinions on equity and futures market, trading stocks, options based on stock and share markets. 4. The petitioner has remitted Goods and Service Tax (GST) for the services rendered to its clients/customers. According to the petitioner, predominantly all the clients/customers of the petitioners are from the U.S and the neighboring countries. 5. Under these circumstances, the petitioner has treated the above supply of services rendered to its clients/customers as "export of service" within the meaning of Section 2(6) of the Integrated Goods and Services Tax Act, 2017. Section 2(6) of the Integrated Goods and Services Tax Act, 2017 reads as under:- 2. In this Act, unless the context otherwise requires,-- (6) "export of services" means the supply of any service when,-- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the paym....
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.... freely convertible VOSTRO account of a Non Resident Bank is a freely convertible NOSTRO Collection Account for Resident Bank. In other words, Paypal as an agent is collecting export proceeds in freely convertible foreign exchange on behalf of the Petitioner 31. Furthermore, it is clear that Paypal was authorized as the agent of the petitioner to collect the money in foreign exchange. This is clear from the Paypal User Agreement which states as follows: "Paypal acts as an intermediary for receipt of funds from buyers by sellers and does not act as a repository or custodian with respect to such funds. For Export Payment Services, Paypal is only responsible for depositing the export proceeds with the authorised dealer bank. For Domestic Payment Services, PayPal is only responsible for depositing the payments with your designated bank." In this user agreement, "Paypal Service" means the payment gateway processing services offered by PayPal to its users who are resident in India to facilitate receipt of payments from a buyer (either domestic or foreign) for credit into their bank accounts." 10. It is further submitted that the payments were received by the....
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....those mentioned in A above (i) Receipt in rupees from the account of a bank situated in any country other than a member country of the Asian Clearing Union. (ii) Receipt in any freely convertible currency. (2) (a) In respect of an export from India, receipt shall be made in a currency appropriate to the place of final destination as mentioned in the declaration form irrespective of the country or residence of the buyer. (b) Any other mode of receipt of export proceeds for an export from India in accordance with the direction issued by the Reserve Bank of India to authorized dealers from time to time. (3) Authorised dealers have been permitted to allow receipts for export of goods/software to be received from a Third Party (a party other than the buyer) as per the guidelines issued by the Reserve Bank." 11. The petitioner is a startup company and is in the process of expanding and growing its business. In such circumstances, the petitioner is relying on the tax refund as one of the source of recycling funds in the business. With the limited capital, the petitioner intricately manages its finances. 12. It is submitted that the 1st re....
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....owledge on various investment options. Payments are routed through the paypal, an intermediary, appointed by the petitioner. The petitioner had therefore filed refund claims, partly seeking refund of ITC availed on service used in provision of such services, under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 on exports of such services made without payment of Tax under Section 54 of the CGST Act, 2017 and partly on refund of tax paid on export of services made on payment of tax under Section 16(4) of Integrated Goods and Services Tax Act, 2017 read with Section 54 of the CGST Act, 2017. 21. The refund claims of the petitioner were rejected by the second respondent vide orders dated 06.11.2019 & .............. on the following two broad categories:- (i) The export proceeds in these cases were received by the petitioner in Indian rupees which was not in accordance with the RBI directions wherein it is stated that export proceeds against specific exports may be realized in rupees provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union, Nepal or Bhutan. ....
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.... supply" of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act, 2017 within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999) for receipt of foreign exchange remittances, in such manner as may be prescribed. 28. As per Section 16(4) of the Integrated Goods and Services Tax Act, 2017, the Central Government may specify on the recommendation of GST council and subject to such safeguards and procedures, (i) a class of persons who may make "zero rated supply" on payment of integrated tax and claim refund of the tax so paid; (ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid. 29. Section 16(4) of the Integrated Goods and Services Tax Act, 2017 is similar to mechanism prescribed under Rule 18 of the Central Excise Rule, 2002. 30. Section 16 of the Integrated Goods and Services Tax Act, 2017 are reproduced below:- S....
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....Tax, 2017 contemplates refund of tax on exports. Section 54 of the Central Goods and Services Tax, 2017 reads as under:- "Section 54 Refund of tax.- (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed : Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 , may claim such refund in [such form and] manner as may be prescribed. (2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55 , entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed , before the expiry of 1 [two years] from the la....
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.... of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under subsection (5) for final settlement of the refund claim after due verification of documents furnished by the applicant. (7) The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects. (8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) refund of tax paid on [export] of goods or services or both or on inputs or input services used in making such [exports]; (b) refund of unutilised input tax credit under sub-section (3); ....
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....ding anything contained in section 56 , be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. (13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of section 27 , shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39 . (14) Notwithstanding anything contained in this section, no refund under subsection (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees. Explanation.- For the purposes of this section,- (1) "refund" includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input t....
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....ules made thereunder, the date of adjustment of tax after the final assessment thereof; (g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and (h) in any other case, the date of payment of tax." 33. The expression "export of services" is defined in Section 2(6) of the Integrated Goods and Services Tax Act, 2017. It reads as under:- "Section 2: In this Act, unless the context otherwise requires,- (6) "export of services" means the supply of any service when, i. the supplier of service is located in India; ii. the recipient of service is located outside India; iii. the place of supply of service is outside India; iv. the payment for such service has been received by the supplier of service in convertible foreign exchange; and v. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8." 34. There is no dispute that the petitioner is providing services of its clients through its online portal to customers/client. The payments for the service....
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....Nepal and Bhutan (a) Receipt may be in Rupees (b) Receipts for export of goods to Nepal may be made in free foreign exchange, provided the importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange. However such receipts shall not be routed through the ACU mechanism. (iii) Islamic Republic of Iran (a) Receipt of export of eligible goods and services, in any freely convertible currency and / or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time. (b) Receipt in any freely convertible currency and / or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time in all other cases. (B) All countries other than those mentioned in A above (i) Receipt in rupees from the account of a bank situated in any country other than a member country of the Asian Clearing Union. (ii) Receipt in any freely convertible currency. (2)(a) In respect of an export from India, receipt shall be made in a currency appropriate to the place of final destination as mentioned in the d....