TaxTMI 
TaxTMI 
2025 (5) TMI 2139
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....of certiorari or any other writ or direction or order to quash impugned Order-in-Original No. 104/2022-23ND3 dated 28.03.2023 bearing DIN:2023035700000000AB77 enclosed as Annexure B for the reasons stated in the grounds. (C) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 8 of Integrated Goods and Services Tax Act, 2017, enclosed as Annexure C, as unconstitutional for the reasons stated in the grounds. (D) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 13 (8) (b) of Integrated Goods and Services Tax Act, 2017, enclosed as Annexure D, as unconstitutional for the reasons stated in the grounds. (E) Issue a writ of certiorari or any other writ or direction or order to quash Circular. No. 159/15/2021 dated 20.09.2021 to extent of Para 3.6 as unconstitutional, enclosed as Annexure E for the reasons stated in the grounds. (F) Issue a writ of certiorari or any other writ or direction or order to quash Circular No. 135/05/2020-GST dated 31 March 2020 to extent of Para 5 as unconstitutional, enclosed as Annexure F for the reasons stated in the grounds. (G) Issue a writ....
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....earing SCN No. 52/2020-21(GST), enclosed as Annexure B1 issued Respondent No.3for the reasons stated in the grounds. (C) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated 12.01.2022 bearing SCN No. 53/2021-22(GST) having DIN 2022015700000000A042, enclosed as Annexure B2 Issued Respondent No.3 for the reasons stated in the grounds. (D) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated 17.01.2022 bearing SCN No. 55/2021-22(GST) and having DIN 20220157YW000000F26E, enclosed as Annexure B3 issued Respondent. No. 3 for the reasons stated in the grounds. (E) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated 21.01.2022 bearing SCN No. 56/2021-22(GST) and having DIN 20220157000000924749, enclosed as Annexure B4, issued Respondent No.3 for the reasons stated in the grounds. (F) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated 02.02.2022 bearing SCN No. 59/2021-22(GST) and having DIN 2022025700000000EA5A, enclosed as 3 Annexure B5 issued Respondent No....
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.... (b) of Integrated Goods and Services Tax Act, 2017, enclosed as Annexure D, as unconstitutional for the reasons stated in the grounds. (E) Issue a writ of certiorari or any other writ or direction or order to quash Circular. No. 159/15/2021 dated 20.09.2021 to extent of Para 3.6 as unconstitutional, enclosed as Annexure E issued by Respondent No. 2 for the reasons stated in the grounds. (F) Issue a writ of certiorari or any other writ or direction or order to quash Circular No. 135/05/2020-GST dated 31 March 2020 to extent of Para 5 as unconstitutional, enclosed as Annexure F issued by Respondent No. 2 for the reasons stated in the grounds. (G) Issue a writ of declaration or any other appropriate writ or direction to declare that the provisions of 36 (4) of Central Goods and Services Tax Rules, 2017, enclosed as Annexure G, as unconstitutional for the reasons stated in the grounds. (H) Grant such other consequential reliefs as this Honourable High Court may think fit including refund of amounts paid, if any and the cost of this writ petition." 2. Brief facts leading to the present petitions are as under:- The petitioner in all the four petitions is M/s. Columbia Sportswe....
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..... 5. Before adverting to the rival contentions, it would be necessary to refer to one of the subject Agreements i.e., Buying Support Services Agreement dated 01.07.2017 entered into between the petitioner and M/s. Columbia Sportswear Company, USA; as stated earlier, several such similar / identical agreements have been entered into between the petitioner and the said company, which are the subject matter of the present petitions. The said Agreement is as under:- "BUYING SUPPORT SERVICES AGREEMENT THIS AGREEMENT, is effective as of July 1, 2017 (the Effective Date), by and between Columbia Sportswear India Sourcing Private Limited ("Provider"), a corporation organized and existing under the laws of India with its principal offices at Corniche Al-Lateef, 3rd Floor, No 25, Cunningham Road, Bangalore, 560 052, Karnataka, India, and Columbia Sportswear Company ("Recipient"), a corporation organized and existing under the laws of the United States of America with its principal offices at 14375 NW Science Park Drive, Portland, Oregon, 97229. USA. RECITALS WHEREAS, Recipient sells and markets outside India Columbia Sportswear, Mountain Hardwear, Montrail, and Sorel brand products ....
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.... ability to deliver quality goods in a timely manner subject to quality parameters of Recipient communicated to manufacturer. * Coordinate with suppliers to obtain production schedules, by factory, which allows Recipient to place production orders directly on manufacturers with its choice of factories and take advantage of quantity price breaks. * Coordinate with suppliers to update the Recipient's Management Information Systems based on direct despatches of manufactured products by the suppliers concerned, to the Recipient. * Provide services in relation to monitoring of the factories which are producing garments for Recipient to ensure compliance with timelines and quality standards prescribed by the Recipient. Provider shall also provide Recipient with production progress reports. In the event that the manufactured goods do not conform to the quality or specifications, Recipient will be notified immediately. * Coordinate to facilitate and get manufacturer to expedite the production and shipment of garments to Recipient, including translating all specification to the language of the manufacturer, ensuring the factory has adequate capability to supply. * Track the sh....
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....ng of any claim, demand or suit and shall fully cooperate in the defense thereof. The indemnified party will not agree to the settlement of any such claim, demand or suit prior to the final judgment thereon without the consent of the indemnifying party, whose consent will not be unreasonably withheld. NOTICES 6.0 All notices and statements hereunder required to be given to Provider will be sent to Pill notices and states first mentioned herein, to the attention of Finance Manager and all notices to Recipient will be sent to Recipient at its address first mentioned herein, to the attention of CFO. Either party may change its address for notice by written notice of the changed address to the other party. All notices shall be sent by telex, cable, telegram or in writing and if in writing shall be sent by registered or certified mail, return receipt requested. The day of receipt of a telex, cable, telegram or a writing sent by mail will be deemed the date of the giving thereof. FORCE MAJEURE 7.0 If the performance of any part of this Agreement by either party, or of any obligation under this Agreement, is prevented, restricted, interfered with or delayed by reason of any cause ....
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....eement, to be effective as of the date first written above by their duly authorized officers." 6. It is seen from the Agreement that the service provider has purchasing responsibilities which would help the foreign service recipient to identify who is the best person from whom products can be brought. The work involves surveying of market to identify the best supplier of goods, identifying best factories, visiting of factories, services relating to monitoring of factories selected by the foreign recipient, ensuring timely shipment of goods, tracking shipments, documentation support for which a consideration is paid as service fee. The service provider has to act in his own name and cannot represent and bind the recipient directly or indirectly. Further, it is provided that the relationship would be one of independent contractor and that they are not principal and agent or employer and employee. 7. Under identical circumstances, while dealing with similar issues pertaining to 'intermediary' and 'intermediary services', this Court in the case of M/s. Amazon Development Centre India Pvt. Ltd., vs. Additional Commissioner of Central Tax & Another - W.P. No. 13007/2024 dated 17.09.202....
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....y order at Annexure-K dated 25.11.2021, the 2nd respondent partially allowed the claim of the petitioner and sanctioned refund of Rs. 28,30,90,158/- and rejected the refund claim to an extent of Rs. 2,52,29,456/-. 2.3 Aggrieved by the aforesaid order dated 25.11.2021, petitioner filed an appeal in GST.A. No. 108/2022-23 before 1st respondent - appellate authority to the extent of rejection of its refund claim in a sum of Rs. 2,52,29,456/-.; so also, the Department / Revenue (Deputy Commissioner - ND4 Division) also filed an appeal in GST.A. No. 116/2022-23 challenging the aforesaid order to the extent of allowing the refund claim of the petitioner in a sum of Rs. 1,09,42,824/-. In addition thereto, the 2nd respondent also issued a show cause notice dated 01.09.2022 to the petitioner proposing to recover the aforesaid alleged erroneous refund of Rs. 1,09,42,824/- from the petitioner, to which the petitioner submitted replies / letters etc., 2.4 By the impugned order at Annexure-A dated 04.01.2024, the 1st respondent - appellate authority dismissed the appeal filed by the petitioner and partially allowed the appeal of the Department to the extent of sanctioning refund in a sum of....
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....aon II vs. Orange Business Solutions Pvt. Ltd., - 2019 (27) G.S.T.L. 523 (Tri- Chan.) 14. Evalueserve.com Pvt. Ltd. Vs. CST, Gurgaon - 2019(365) E.L.T. 546 (Tri- Chan); 15. Macquarie Global Services Pvt. Ltd v. CCE & ST, Gurgaon, 2021-TIOL-790-CESTAT-CHD. 9. It would also be profitable to extract the aforesaid CBIC Circular No. 159/15/2021-GST dated 20.09.2021, which is as under: "Circular No. 159/15/2021-GST F.No. CBIC-20001/8/2021-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs New Delhi, dated the 20th September, 2021 Subject: Clarification on doubts related to scope of "Intermediary"-reg. Representations have been received citing ambiguity caused in interpretation of the scope of "Intermediary services" in the GST Law. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act"), hereby clarifies the issues i....
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....supply. 3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; (1) Main supply, between the two principals, which can be a supply of goods or services or securities; (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is supply of intermediary service and is clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. 3.3 Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of "intermediary" itself provides that intermediary service provider means a broker, an agent or any other person, by whatever name called....". This part of the definition is not inclusive but uses the expression "means" and does not expand the definition by any known expression of expansion such as "and includes". The use of the expression "arranges or facilitates" in the definition of "intermediary" suggests a subsidiary role for the int....
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....services or location of the recipient of intermediary services is outside India. 4. Applying the abovementioned guiding principles, the issue of intermediary services is clarified through the following illustrations: Illustration 1 'A' is a manufacturer and supplier of a machine. 'C' helps 'A' in selling the machine by identifying client 'B' who wants to purchase this machine and helps in finalizing the contract of supply of machine by 'A' to 'B'. 'C' charges 'A' for his services of locating 'B' and helping in finalizing the sale of machine between 'A' and 'B', for which 'C' invoices 'A' and is paid by 'A' for the same. While 'A' and 'B' are involved in the main supply of the machinery, 'C', is facilitating the supply of machine between 'A' and 'B'. In this arrangement, 'C' is providing the ancillary supply of arranging or facilitating the 'main supply' of machinery between 'A' and 'B' and therefore, 'C' is an intermediary and is providing intermediary service to 'A'. Illustration 2 'A' is a software company which develops software for the clients as per their requirement. 'A' has a contract with 'B' for providing some customized software for its business operations. 'A....
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....e would fall under intermediary services within the meaning of sub-section (13) of section 2 of the IGST Act, would depend upon the facts of the specific case. While examining the facts of the case and the terms of contract, the basic characteristics of intermediary services, as discussed in para 3 above, should be kept in consideration. 6. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow. 10. A perusal of the aforesaid Circular will indicate that in order to qualify as intermediary services, the following pre-requisites have to be satisfied: (i) There must be a minimum of three parties; (ii) There must be two distinct supplies, one being the main supply and other being an ancillary supply of "arranging" or "facilitating" the main supply; (iii) The intermediary service provider must have the character of an agent, broker or any other similar person; (iv) Intermediary does not include a person who supplies such goods or services on his own account; (v) Sub-contracting for a service is n....
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....rranging or facilitating the supply of services between 'P' and 'R', and not himself providing the main supply of services. Accordingly, in this case, 'Q' acts as an intermediary as per definition of sub-section (13) of section 2 of the IGST Act. illustration 4 'A' is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this supply, 'A' is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. 'A' decides to outsource the task of providing customer care services to a BPO firm, 'B'. 'B' provides customer care service to 'A' by interacting with the customers of 'A' and addressing / processing their queries / complains. 'B' charges 'A' for this service. 'B' is involved in supply of main service 'customer care service' to 'A', and therefore, 'B' is not an intermediary. 12. A perusal of the aforesaid customer services agreements read with the aforesaid Circular is sufficient to come to the conclusion that in the absence of the requirements stipulated in the Circular, the petitioner cannot be construed or treated or considered as an "inte....
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....ply chain management. 4. It is asserted that aforesaid services are actually deliverables of the petitioner on its "own account". Such services are provided by the petitioner from India remotely through telecommunication/internet links using its own infrastructure and work force of approximately 50 thousand employees. 5. The petitioner entered into a Master Services Sub-Contracting Agreement dated January 1, 2013 (hereinafter referred to as MSA) with Genpact International Incorporated (GI) an entity located outside India. It is asserted that as per terms of the MSA various services are to be provided by the petitioner on a principal to principal basis. Further the petitioner is engaged by GI for actual performance of BPO services to the clients of GI located outside India. The arrangement requires the petitioner to complete the assigned processes/scope of work directly to the third parties located outside India. Copy of the MSA entered between the petitioner and GI stands annexed as annexure P1 along with the petition. 20. We have heard counsel for the parties at length and have perused the pleadings on record. 21. The primary issue that arises for consideration is as to wh....
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....of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process ; (b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services. (4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or coordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located. (5) The place of supply of services supplied by way of admission to, or organisation of a cultural, artisti....
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....or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. (9) The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods. (10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey. (11) The place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the First Scheduled point of departure of that conveyance for the journey. (12) The place of supply of online information and database access or retrieval services shall be the location of the recipient of services. Explanation.--For the purposes of this sub-section, person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied, namely :- (a) the location of address presented by the reci....
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....Services tax Act within thirty days after the expiry of the time limited prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999) for receipt of foreign exchange remittances, in such manner as may be prescribed. (4) The Government may, on the recommendation of the council, and subject to such conditions, safeguards and procedures, by notification, specify- (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." Central Goods and Services tax Act, 2017 "S. 2. Definitions.-In this Act, unless the context otherwise requires,- (1) to (4). .. (5) 'agent' means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another ; (6) to (121). .. S. 54. Refund of tax.-(1) Any person claiming refund of any tax and interest, if any, paid on ....
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.... of the recipient, except in case of certain specified services. For "intermediary" services, the place of supply is the location of the supplier. section 16(1)(a) inter alia provides that the export of services amount to "zero rated supply". Section 16(2) provides that credit of input tax may be availed for making zero rated supplies. Section 54 of the CGST Act prescribes the manner in relation to claiming refund by taxpayers, mainly covering the eligibility and prescribed time-lines for filing the refund claim application. A tax payer engaged in export of services without payment of GST is eligible to claim refund of unutilized input-tax credit. 25. We have examined the MSA (annexure P1) in depth and which was imperative to take a view as regards the findings recorded in the impugned order dated February 15, 2021 (annexure P18). In para 16 of the impugned order the recitals of the MSA dated January 7, 2013 (annexure P1) as also certain clauses have been referred to while concluding the petitioner to be an "intermediary". 29. As per definition of "intermediary" under section 2 (13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an "....
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....seas clients of GI but does not get any remuneration from such clients. Pursuant to the arrangement, it is GI which gets paid by its customers to whom the services are being provided directly by the petitioner. Nothing has been brought on record to show that the petitioner has a direct contract with the customers of GI. Still further there is nothing on record to show that the petitioner is liaisoning or acting as an "intermediary" between GI and its customers. All that is evident from the record is that the petitioner is providing the services which have been sub-contracted to it by GI. As a sub-contractor it is receiving fee/charges from the main contractor, i. e., GI for its services. The main contractor, i. e., GI in turn is receiving commission/ agents from its clients for the main services that are rendered by the petitioner pursuant to the arrangement of sub-contracting. Even as per the afore-noticed circular dated September 20, 2021 and in reference to para 3.5 it stands clarified that sub-contracting for a service is not an "intermediary" service. 15. The aforesaid judgment of the Punjab and Haryana High Court has attained finality as is clear from the subsequent judgmen....
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....dgment, held that the petitioner was not "intermediary" and, therefore, the refund claim of unutilized Input Tax Credit (ITC) used in making zero rated supplies of services without payment of IGST was allowed. 8. Learned Counsel for the petitioner has further stated that the respondents have implemented the judgment dated 11-11-2022 passed in CWP-6048-2021 by detailed order and also decided to file SLP in the Hon'ble Supreme Court. Finally refund for an amount of Rs. 21,98,06,002/- for the period April, 2019 to June, 2019 has been sanctioned by the Deputy Director Division East-II, Central Tax GST Gurugram. It is further stated therein that as per the letter dated 8-5-2023 issued by CBIC, the respondents have decided not to file SLP against the judgment dated 11-11-2022 passed in CWP-6048-2021. 9. Hence, this Court is of the view that since the respondents have taken conscious decision not to file SLP against the judgment dated 11-11-2022 passed in CWP-6048-2021, the ratio of Genpact India (P.) Ltd.'s case (supra) is directly applicable in this case. 10. Writ petition is allowed and notice dated 30-3-2021 (Annexure P-29) is set aside. 16. A similar view has been tak....
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....wards Cenvat credit. 15. It is pertinent to mention here that vide a communication dated March 16, 2012 by the Department of Revenue (Tax Research Unit), the term "Intermediary" services has been explained as follows : "3.7.7 What are 'intermediary services' ? An 'intermediary' is a person who arranges or facilitates a supply of goods, or a provision of service, or both, between two persons, without material alteration or further processing. Thus, an 'intermediary' is involved with two supplies at any one time : (i) the supply between the principal and the third party ; and (ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged. For the purpose of this rule, an 'intermediary' in respect of goods (commission agent i.e a buying or selling agent) is excluded by definition. In order to determine whether a person is acting as an intermediary or not, the following factors need to be considered : Nature and value : An 'intermediary' cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may aut....
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.... may be agreed upon from time to time. Clause 19 of the agreement specifically stipulates that the relationship of the parties to the agreement shall always and only be that of independent contractors and nothing in the agreement shall create or be deemed to create a partnership or the relationship of principal and agent or employer and employee between the parties. Incidentally, the appellant has not even alleged that the aforesaid agreement is a camouflage, fraudulent or designed to get over the service tax dragnet. 19. In the end, in so far as the decision in Verizon Communications India Ltd. (supra), the factual narration reads that Verizon India had entered into a master supply agreement with Verizon US for rendering connectivity services for the purpose of data transfer to the end-user based in USA. The issue that came to be was addressed by the Co-ordinate Bench was whether the telecommunication services provided by Verizon India for the period in question amounted to "export of services" within the meaning of rule 6A of the ST Rules. This was answered in the affirmative. It was held that since the recipient of the service Verizon US was outside India, Verizon India rightl....
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....ontract with telecom service providers in India and the end consumers are based in Singapore and other foreign territories covered by SingTel and are independently entitled to demand service from SingTel and pay for the services accordingly to it too. 21. Before parting with the instant appeals, our attention has been drawn to the earlier round of litigation between the parties with regard to refund applications moved by SGIPL under section 11B of the CE Act as made applicable to the service tax vide section 83 of the Finance Act and which had led to a decision by a Co-ordinate Bench of this court in SingTel Global (India) Pvt. Ltd. v. Union of India [2023] 111 GSTR 156 (Delhi) ; (2023) 2 Centax 203 (Delhi)* whereby for the same period, i. e., July, 2015 to June, 2017 after the appeal was allowed by the Commissioner (Appeals) vide order dated July 5, 2019 (subject matter of ST Appeal No. 56682 of 19),. the Assistant Commissioner while processing the claim of SGIPL for refund of input tax for the aforesaid rather questioned the decision of the Commissioner (Appeals) in allowing the claim of the SGIPL for unutilized Cenvat credit inter alia observing that the decision in Verizon Co....
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....d not be barred by condition (v) of Section 2 (6) of the IGST Act. 8. The petitioner also set out the relevant paragraphs of the said circular in its response to the Show-cause notice. However, the respondents, without alluding or referring to the said circular, simply rejected the petitioner's application for refund on the same ground as stated in the show cause notice. The respondents, after referring to the provisions of Section 2 (6) of the IGST Act also mentioned that the petitioner was an intermediary in terms of Section 13 of the IGST Act read with Circular dated 18.07.2019. 9. The petitioner is a separate entity and it is settled law that identity of an incorporated company is separate from that of its shareholders. This fundamental proposition was reiterated by the Constitution Bench of the Supreme Court in Bacha F. Guzdar v. Commissioner of Income-Tax, AIR 1955 SC 74. 10. The services rendered by a subsidiary of a foreign company to its holding are not covered under Section 2 (6) (v) of the IGST Act and the same is beyond any pale of controversy in view of the Circular dated 20.09.2022 issued by the CBIC. The said circular, in unambiguous terms, clarifies as und....
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....on and direct the respondents to forthwith process the petitioner's claim for refund along with interest. 14. We also express our displeasure in respect to the cavalier manner in which respondent no. 1 has passed the impugned order without considering the settled law and the Circular dated 20.09.2021 issued by the department despite the same being brought to its notice. Such orders, apart from unnecessarily increasing the burden of tax litigation, have a debilitating effect on the confidence of taxpayers in the tax department. 18. Section 2 (13) of the IGST Act defines 'intermediary' as under:- 2. Definitions:- (13) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; 19. The aforesaid definition makes it clear that the same requires two distinct services i.e., one between the principal and third person and the second between agents / intermediary and principal; it follows therefrom that where a person himself performs....
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....) of the Place of Provision of Services Rules, 2012. 15. In so far as, the period prior to July 1, 2012 is concerned, the learned CESTAT did not accept the finding of the adjudicating authority that services covered under section 65 (105) (zzb) of the Act were excluded from the scope of Export of Taxable Services under rule 3(1) of the Export of Services Rules, 2005. 16. The Revenue has preferred the present appeal projecting the following question for consideration of this court: "(a) Whether the services provided by the respondent to RIM Singapore constitute intermediary service ? (b) Whether the respondent is eligible for refund of service tax on services provided by it to RIM Singapore ?" 17. It is relevant to note that the Revenue does not dispute that the services rendered by the Blackberry India were covered under the Agreement entered into between Blackberry India and Blackberry Singapore. 18. In terms of the engagement under the agreement, Blackberry India had agreed to provide services in a timely and professional manner. Further, it had also agreed to acquire facilities, equipment and staff to effectively do so. The services to be provided by Blackberry India....
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....ain service or supplies the goods on his account;" 22. It is apparent from the aforesaid definition that an intermediary merely arranges or facilitates provision of services. In the present case, the services rendered by BlackBerry India to BlackBerry Singapore under the Agreement, were not in the nature of facilitating services from another supplier. Blackberry India, as an independent service provider, was required to render the promotional and marketing services; technical marketing assistance; and other related services. Blackberry India did not arrange or facilitate these services from another supplier. 23. It is also relevant to refer to the circular dated September 20, 2021 issued by the Central Board of Indirect Taxes and Customs. Although the said circular has been issued in the context of the Goods and Services Tax, it notes that the concept of intermediary, as defined under section 2 (13) of the Integrated Goods and Services Tax Act, 2017, was borrowed from rule 2 (f) of the Place of Provision of Services Rules, 2012 and explains the said concept. The relevant extract of the said circular is set out below: "2. Scope of intermediary services 2.1. 'Intermediary' ha....
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....nd distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. 3.3. Intermediary service provider to have the character of an agent, broker or any other similar person : The definition of 'intermediary' itself provides that intermediary service providers-means a broker, an agent or any other person, by whatever name called... This part of the definition is not inclusive but uses the expression 'means' and does not expand the definition by any known expression of expansion such as 'and includes'. The use of the expression 'arranges or facilitates' in the definition of 'intermediary' suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4. Does not include a person who supplies such goods or services or both or securities on his own account : The definition of 'intermediary services' specifically mentions that intermediary 'does not include a person who supplies such goods or services o....
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.... and consequently, the assessee was not an 'intermediary' in terms of paragraph 3.5 of the aforesaid Circular and on this score also, the contentions of the respondents cannot be accepted. 22. It is pertinent to note that in order to constitute an 'intermediary', it is imperative that the nature of the second service from the agent to the principal ought to be that of arranging or facilitating the service between principal and third person and the activity undertaken by the intermediary should satisfy the natural meaning of the terms "arranging" or "facilitating", the provision of another person's service, especially when performance of the very service cannot be construed or treated to fall within the scope of the phrase "arrange" or "facilitate" the same service; paragraph 3.3 of the Circular provides that the use of the expression "arranges" or "facilitates" in the definition of 'intermediary' suggests a subsidiary role for the intermediary, wherein it must arrange or facilitate some other supply and the person does not himself provide the main supply by clarifying that the role of a 'intermediary' is only supportive; in the instant case, the material on record clearly establi....
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....to service agreements for providing professional consultancy service to various entities of Ernst & Young group (hereafter "EY entities") including Ernst & Young US LLP (hereafter "EY US"), Ernst & Young Service Pty Ltd. Australia (hereafter "EY Australia"), Ernst & Young Group Ltd. New Zealand (hereafter "EY NZ") and Ernst & Young LLP, UK (hereafter "EY UK") on arm's length basis. 7. In terms of the aforementioned service agreements, the overseas entities had retained E&Y Limited, acting through its Indian branch (the petitioner herein) to provide certain professional services (the services). It is material to note that the petitioner had placed on record the agreements dated 29-9-2009 entered into between E&Y Limited and EY US; agreement dated 25-10-2010 between E&Y Limited and EY Australia; agreement dated 15-1-2018 entered into between E&Y Limited and EY NZ; agreement dated 20-12-2012 E&Y Limited and EY UK; and agreement dated 25-9-2018 between E&Y Limited and EY US. 19. The term "intermediary" is defined under Section 2 (13) of the IGST Act. "'intermediary' means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply o....
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....es were rendered on behalf of its head office, the same were not on the petitioner's "own account"; therefore, the petitioner is an intermediary. 23. It is apparent that the adjudicating authority has interpreted the last limb of the definition of "intermediary" under Section 2 (13) of the IGST Act as controlling the definition of the term. We are unable to agree with this interpretation. The limb of Section 2 (13) of the IGST Act reads as "but does not include a person who supplies such goods or services or both or securities on his own account" but this does not control the definition of the term "intermediary"; it merely restricts the main definition. The opening lines of Section 2 (13) of the IGST Act expressly provides that an intermediary means a broker, agent or any other person who "arranges or facilitates supply of goods or services or both or securities between two or more persons". The last line of the definition merely clarifies that the definition is not to be read in an expansive manner and would not include a person who supplies goods, services or securities on his own account. There may be services, which may entail outsourcing some constituent part to a third....
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....y" for the purposes of levy of service tax under the Finance Act, 1994 is similar to the definition of the term "intermediary" under Section 2 (13) of the IGST Act. 28. The Circular dated 20-9-2021 (Circular No. 159-15-2021-GST) issued by the Central Board of Indirect Taxes and Customs also acknowledges that there is broadly no change in the scope of intermediary services in the GST regime vis-à-vis the service tax regime. The relevant extract of the said circular is set out below: "2. Scope of intermediary services 2.1. 'Intermediary' has been defined in the sub-section (13) of Section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as 'the IGST Act') as under: '"Intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.' 2.2. The concept of 'intermediary' was borrowed in GST from the service tax regime. The definition of 'intermediary' in the service tax law as given in Rule 2 (f) of the Pla....
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....he use of the expression 'arranges or facilitates' in the definition of 'intermediary' suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4. Does not include a person who supplies such goods or services or both or securities on his own account.-The definition of 'intermediary services' specifically mentions that intermediary 'does not include a person who supplies such goods or services or both or securities on his own account'. Use of word 'such' in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal-to-principal basis, the said supply cannot be covered under the scope of intermediary...." 30. It is also relevant to refer to Section 2 (6) of the IGST Act, which defines the expression "export of services". Section 2 (6) of the IGST Act is set....
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....the purposes of this sub-section, the expression,- (a) 'account' means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account; (b) 'banking company' shall have the same meaning as assigned to it under clause (a) of Section 45-A of the Reserve Bank of India Act, 1934 (2 of 1934); (c) 'financial institution' shall have the same meaning as assigned to it in clause (c) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934); (d) 'non-banking financial company' means,- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or (iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify." 33. In terms of sub-section (8) of Section 13 of the IGST Act, the place of supply of certain services would be the location of the supplier of the services. In terms o....
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..... It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity between only two parties can, therefore, not be considered as an intermediary service. An intermediary essentially 'arranges or facilitates' another supply (the 'main supply', between two or more other persons and, does not himself provide the main supply." 26. So also, in M/s Cube Highways case supra, the Delhi High Court held as under:- 41. "Intermediary" as defined under sub-section (13) of Section 2 of the IGST Act is a person who facilitates supply of services - he does not supply services himself but merely arranges the same. The Central Board of Indirect Taxes and Customs had issued a Circular dated 20-9-2021 which clearly defines the scope of "intermediary services". The relevant extracts of the said circular are set out below: "2. Scope of intermediary services 2.1. 'Intermediary' has been defined in the sub-section (13) of Section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinaf....
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....nother person cannot be considered as supplier of intermediary service. 3.3. Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of 'intermediary' itself provides that intermediary service providers-means a broker, an agent or any other person, by whatever name called... This part of the definition is not inclusive but uses the expression 'means' and does not expand the definition by any known expression of expansion such as 'and includes'. The use of the expression 'arranges or facilitates' in the definition of 'intermediary' suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4. Does not include a person who supplies such goods or services or both or securities on his own account: The definition of intermediary services specifically mentions that intermediary 'does not include a person who supplies such goods or services or both or securities on his own account'. Use of word 'such' in the definition with reference to supply of goods or services....
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....lies specific to each State or Union Territory shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed." 52. Sub-section (3)(b) of Section 13 of the IGST Act is equally inapplicable. First of all, it relates to services which are supplied to an individual and which require physical presence of the recipient (or a person acting on his behalf) with the supplier of the services. There is no allegation that the petitioner has rendered any service to an individual. Plainly, the adjudicating authority has misunderstood the nature of services covered under sub-section (3)(b) of Section 13 of the IGST Act. These are essentially in the nature of personal services which require the physical presence of the service recipient. A publication issued by the Central Board of Excise & Customs captioned "Taxation of Services: An Education Guide" explains the significance of the words "physical presence of an individual", whether represented either as the service receiver or a person acting on behalf of the receiver,....
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....impugned in the present petitions are liable to be set aside. 56. Mr Ramachandran had filed written submissions, inter alia, praying that the matter be remanded for re-adjudication in the light of the decision in Ernst & Young Ltd. v. Commr. (CGST) [Ernst & Young Ltd. v. Commr. (CGST), (2023) 113 GSTR 252 : 2023 SCC OnLine Del 1764] by, inter alia, praying as under: "In view of the foregoing facts and circumstances, it is respectfully prayed that this Court be pleased to remand the matter for re-adjudication in the light of the decision of this Court in Ernst & Young Ltd. v. Commr. (CGST) [Ernst & Young Ltd. v. Commr. (CGST), (2023) 113 GSTR 252 : 2023 SCC OnLine Del 1764] by calling for additional documents/information if any, required." 57. However, we are unable to accept that the present petitions are required to be remanded to the adjudicating authority for consideration afresh. There is no material which would even remotely suggest that the services rendered by the petitioner are not as claimed, that is, advisory services relating to investments in India. As noticed above, the authorities concerned had also accepted the same as is apparent from some of the observations ....
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....Dhar s/o Mr. Moti Lal Dhar resident of F-123, sector -41, Noida -201301 hereinafter referred to as:'Indian Company' of the Other Part. Whereas the Foreign Company is carrying on the business of providing outsourcing services of a technical nature to its various clients located across the globe. xxxx xxxxx xxxx 1. That the foreign Company shall engage the Indian company for executing Bookkeeping, Payroll, and accounts, through the use of cloud techno logy for our UK/Europian based clients. 2. That the Indian company shall devote whole time for the work assigned by the foreign company and shall maintain all work-related ethics. It is expected that work will be accomplished efficiently and intelligently. XXXX XXXX XXXX 5. That the foreign company shall pay a monthly fee for the services rendered by the Indian company as follows:- a. GBP 3250/- (Fixed) to be paid every month till the period of engagement. b. GBP 500/- per Workstation engaged by the Indian company for completion the work assigned. c. The above fees is subject to review and change with mutual consent from time to time." 10. It is clear from the aforesaid terms, that the petitioner is not an inteimedia....
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.... liable to be rejected. In this context, respondents 2 and 5 failed to appreciate that the material on record clearly establish that the services provided by the petitioner was on principal-to-principal basis and did not involve any 3rd party and there was no principal / agency relationship between the petitioner and the overseas entity. (xiii) A perusal of the agreements entered into between the petitioner and the overseas entity will indicate that services provided by the petitioner cannot be construed or treated as intermediary services as is evident from the relevant covenants/clauses of the Agreement, which reads as under- BACKGROUND WHEREAS, Recipient is the operational headquarter of Networks business within Nokia Group as well as the business principal, responsible for developing, improving, maintaining. protecting and funding of portfolio of the intellectual assets related to Networks Network business; WHEREAS, Provider is the wholly owned subsidiary of Nokia Solutions and Networks BV. Netherlands and engaged in Networks business in India. Provider is also providing software development support services (hereinafter referred to as the "Services") to the Recipient f....
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....ith the planning and reporting procedures laid down by Recipient and its R&D function management or, if not specified therein, as Recipient may from time to time request as its sole discretion. 1.5. ROLES AND RESPONSIBILITIES OF THE PARTIES 1.5.1. Recipient shall be responsible for conceptualising and determining the characteristics/ functionalities of the software/software module to be developed by the Provider. 1.5.2. Recipient shall provide the software module specifications, project/ product specifications for the software to be developed/ tested by the Provider. On a need basis, the Provider will provide its inputs in the requirement analysis phase of the software development process. Recipient shall be fully responsible for the specifications and the requirements of the software to be developed/tested by the Provider. Services performed by the Provider will be based on the statement/ schedule of work issued by Recipient. 1.5.3. Provider shall undertake the coding and documentation function with respect to the software modules that it will develop. Coding shall primarily consist of writing and documenting the software module being developed. 1.5.4. Provider shall be ....
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....rovided to the Provider by Recipient or which the Provider creates, produces, builds, or has created, produced or built in the course of any work under this Agreement including all intellectual property rights therein shall rest in and remain Recipient's property and Recipient is entitled to take possession of them, at any time. 1.7.2. Recipient shall be entitled to take possession of the materials referred to in Clause 1.5. It is expressly understood that the Provider shall use such documents, drawings, models or any other materials only for the purpose of providing the Services under this Agreement and for no other purpose whatsoever and that such materials are subject to confidentiality as set out in Clause 12. 1.7.3. No license to the Provider under any trademark, patent, copyright or any other intellectual property right is either granted or implied by the conveying of any documents, drawings, models or any other materials in whatever form to the Provider (in respect of any rights of Recipient) save for the purpose of carrying out the Services under this Agreement. 2. CONSIDERATION, INVOICING AND PAYMENT TERMS 2.1. CONSIDERATION 2.1.1. In consideration for the pe....
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....ctivity and cost report in accordance with the Recipient's instructions and practice. In addition, when requested by Recipient, Provider shall provide any such additional information, in the form separately agreed, of the costs incurred and the allocation of the costs together with supporting materials to the Recipient, as may be required by the Recipient. 2.2.2. For all of the Services under this Agreement, Provider shall prepare a detailed action plan and cost and investments plan in accordance with the Nokia Group's planning process. Such plan shall be subject to approval within the Provider's legal entity and regional management for the purposes of corporate authorization on behalf of the Provider. The approval and adoption of Recipient's relevant R&D management group and relevant operational units short term plans shall constitute approval of the R&D action plan on behalf of Recipient, as well as a purchase order for the Services under this Agreement. Any activities added or materially changed during the year shall be approved by corresponding bodies in accordance with applicable procedures of Nokia Group prior to implementation of any changes. 2.2.3. Provi....
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....definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity between only two parties can, therefore, NOT be considered as an intermediary service. An intermediary essentially "arranges or facilitates" another supply (the "main supply") between two or more other persons and, does not himself provide the main supply. 3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; (1) Main supply, between the two principals, which can be a supply of goods or services or securities; (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is supply of intermediary service and is clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal t....
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....ntract, by providing annual maintenance of tools and machinery to the customer of 'A', i.e. to 'B' on behalf of 'A'. Though 'C' is dealing with the customer of 'A', but 'C' is providing main supply of Annual Maintenance Service to 'A' on his own account, i.e. on principal to principal basis. In this case, 'A' is providing supply of Annual Maintenance Service to 'B', whereas 'C' is supplying the same service to 'A'. Thus, supply of service by 'C' in this case will not be considered as an intermediary. 3.6 The specific provision of place of supply of 'intermediary services' under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India.' (x) As can be seen from the aforesaid Circular, the scope and requirements of intermediary services are; (i) minimum of three parties (ii) Two distinct supplies (iii) character of an agent, broker or any other similar person (iv) does not include persons who supplies goods and services or both on his own account. (xi) In the instant case, none of the aforesaid criteria / requirement is fulfilled by the petitio....
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....s 'Intermediary' between the cloud computing service provider and their end customers/users/subscribers as per Section 2 (13) of the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the "IGST Act") and whether the services provided by data hosting service provider to cloud computing service providers are covered as intermediary services and whether the place of supply of the same is to be determined as per section 13 (8) (b) of IGST Act. (ii) Whether the data hosting services are provided in relation to goods "made available" by recipient of services to service provider for supply of such services and whether the place of supply of the same is to be determined as per section 13 (3) (a) of the IGST Act. (iii) Whether the data hosting services are provided directly in relation to "immovable property" and whether the place of supply of the same is to be determined as per section 13 (4) of the IGST Act. 3. Clarification 3.1 Whether data hosting service provider qualifies as 'Intermediary' between the cloud computing service provider and their end customers/users/subscribers as per Section 2 (13) of the IGST Act and whether the services provided by data h....
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....d that the data hosting service provider provides data hosting services to the cloud computing service provider on principal-to-principal basis on his own account and is not acting as a broker or agent for facilitating supply of service between cloud computing service providers and their end users/consumers. 3.1.4 Accordingly, it is clarified that in such a scenario, the services provided by data hosting service provider to its overseas cloud computing service providers cannot be considered as intermediary services and hence, the place of supply of the same cannot be determined as per section 13 (8) (b) of IGST Act. Circular No. 230/24/2024-GST F. No. CBIC-20001/6/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing *** New Delhi, dated the 10th September, 2024 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All), The Principal Directors General/ Directors General (All). Madam/Sir, Subject: Clarification in respect of advertising services provided to foreign clients-reg. References have been received from t....
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....93) of CGST Act? c. Whether the advertising services provided by the advertising companies to foreign clients can be considered as performance-based services as per section 13(3) of the IGST Act? 3. CLARIFICATION: 3.1 Issue 1 -Whether the advertising company can be considered as an "intermediary" between the foreign client and the media owners as per section 2 (13) of IGST Act? 3.1.1 As per section 2 (13) of IGST Act, read with Circular no. 159/15/2021-GST dated 20.09.2021, a broker, agent or any other person who arranges or facilitates the main supply of goods or services or both or securities and has not involved himself in the main supply on his own account is considered as intermediary. 3.1.2 In the instant scenario, it is observed that the foreign clients enter into a comprehensive agreement with advertising companies/agencies in India and outsource the entire activity of advertising services to the advertising companies/agencies. Further, these advertising companies/agencies enter into an agreement with the media owners in India for implementing the said media plan and procurement of media space for airing or releasing or printing advertisement. 3.1.3 The advertis....
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....tionship of a principal and agent exists, the following factors/aspects should be taken into consideration: (a) The essential characteristic of an agent is the legal power vested with the agent to alter his principal's legal relationship with a third party and the principal's co-relative liability to have his relations altered. (b) As the agent acts on behalf of the principal, one of the prime elements of the relationship is the exercise of a degree of control by the principal over the conduct of the activities of the agent. This degree of control is less than the control exercised by the master on the servant, and is different from the rights and obligations in case of principal to principal and independent contractor relationship. (c) The task entrusted by the principal to the agent should result in a fiduciary relationship. The fiduciary relationship is the manifestation of consent by one person to another to act on his or her behalf and subject to his or her control, and the reciprocal consent by the other to do so. (d) As the business done by the agent is on the principal's account, the agent is liable to render accounts thereof to the principal. An agent i....
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....x Officer [1977] 3 SCC 147. has expounded the difference between principal-agent and principal-principal relationship, in the following words:- "5. ... the essence of the matter is that in a contract of sale, title to the property passes on to the buyer on delivery of the goods for a price paid or promised. Once this happens the buyer becomes the owner of the property and the seller has no vestige of title left in the property. The concept of a sale has, however, undergone a revolutionary change, having regard to the complexities of the modern times and the expanding needs of the society, which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer, e.g. fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale. A contract of agency, however, differs essentially from a contract of sale inasmuch....
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....' is an inclusive definition giving wide meaning to the expression 'commission'. The second decision is in the case of Singapore Airlines Ltd. v. CIT [2022] 144 taxmann.com 221/[2023] 290 Taxman 139/449 ITR 203/[2023] 1 SCC 497 which we shall refer to subsequently in some detail as to its exact purport and ratio. However, at this stage, we would like to examine in some detail commercial relationships in the nature of an independent contractor, that are legally, principal to principal dealings. 14. The passage from Bhopal Sugar Industries Limited (supra) highlights the principles and the complexities involved in determining the correct nature of the legal relationship between a principal and an agent. Law permits individuals to enter into complex contracts incorporating multiple rights and obligations. The relationships between contacting parties have become multi-dimensional, which may not strictly fall within an employer-employee, principal-agent or principal-principal relationship. A singular contract may create different legal relationships and obligations. Independent contractors on occasion act for themselves, and at other times may be creating legal relations be....
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....ght be for failure of duty, nor do their contracts with other parties - whether it be suppliers, retail dealers or individual customers - hold the party who sold to them, liable, for any breach including misrepresentation or sale of defective goods. The seller's contractual or tortious liability is different from the manufacturer's liability on account of warranty/guarantee, statutory liability or even obligation to a third party who purchases the goods or avails services from/through the independent contractor. An agent renders service to the principal, who he/she represents, and therefore the principal, and not the agent, is liable to the third parties. Further, the money received by an independent contractor from his customers will belong to the independent contractor and not to the party who sold to him. The money will be a part of such independent contractor's property in the event of his bankruptcy or liquidation. This may be the case even if the contract of sale is one of 'sale or return'. It is important to avoid confusion, by applying the legal tests, that may arise where the functions of the 'buyer' - described as an 'agent' - is really....
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....nitions of express and implied authority.- An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case. 188. Extent of agent's authority.- An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act. An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business. xxx 191. "Sub-agent" defined.- A "sub-agent" is a person employed by, and acting under the control of, the original agent in the business of the agency. xxx 222. Agent to be indemnified against consequences of lawful acts.- The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him." 15.2 According to Bowstead and Reynolds on Agency, 23rd Edition, agency is the fiduciary relationship which exists between two p....
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....some form of concession as a regular stockist, distributor or franchisee, are often described as agent, selling agent, main agent, etc. for the manufacturer of goods which they supply. However, nowadays the distributor actually buys from the manufacturer and resells it to his own customers. In such cases, the term 'agent' is used in a complimentary sense only, i.e., not to transact any business on behalf of the principal, except as regards purchase of the goods from the principal. Such a relationship is quite different from an agency. The distinction between an agent and the buyer for resale normally turns on whether the person concerned acts personally to make such profit as can be made, or is remunerated by pre-arranged commission. A supplier who fixes the resale price is likely to be a buyer for resale. If a party takes a profit on the resale, it will make him a seller. On the other hand, if a commission is paid on the resale, then, he is likely to be an agent. 15.5 In Benjamin's Sale of Goods, Eleventh Edition, Sweet & Maxwell, it has been stated that sale has to be distinguished from a contract of agency. When goods are delivered to another for sale to a third party, the rec....
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....r, he should not make this supply on his own account; * In terms of the above, it is clear that if a person acts as an intermediary, apart from him, at least two persons should be involved and the intermediary would facilitate supply between two or more of them. Therefore, there should be, (i) a minimum of three parties (ii) two distinct supplies, where principal will supply the goods or services to a third party as one supply and such a transaction should be facilitated or arranged by one party who is then called an intermediary rendering the second supply to the principal (iii) such a transaction would therefore, mean that one person actually represents the principal as an agent and therefore (iv) does not do his service on his own account. * The agreement, therefore, should clearly indicate that he is acting as such facilitator between two or more persons and therefore, at least three parties would then be involved as pointed out by the Apex Court in Bharati Cellular's case supra stating that it should be a triangular relationship, though the third party need not be identified in the agreement itself but it would be apparent from the agreement that there is a....
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....elationship is established. Sub contractors would very well be doing the said work on their own account as is often the case with software development or research work carried out in India on contract basis. * It is also axiomatic that absence of three persons would straightaway rule out the agreement from the scope of intermediary services as the agreement would then be a service provider-service receiver relationship without the service provider doing any facilitating or arranging. Therefore, in a given agreement, if there is no scope for the service provider to act on behalf of the service receiver, then the agreement is one on principal to principal basis where services are provided on own account. * It would be necessary to consider that the definition of "intermediary" is far more restricted than that of an "agent". The term "agent" is not defined in the IGST Act, 2017 but it is defined in the CGST Act, 2017 under Section 2(5) to mean, a person who carries on the business of supply or receipt of goods or services or both on behalf of another person and he could be a factor, broker, commission agent, arhatia, del credere agent, auctioneer or any other mercantile agent by w....
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....kin to business support services to enable efficient procurement of garments and a continuing business relationship rather than enabling procurement of orders on a commission basis. 13. In view of the aforesaid facts and circumstances, I am of the view that the impugned orders and demands made by the respondents deserve to be quashed. 14. A perusal of the orders impugned in W.P. No. 3376/2023 and W.P. No. 3420/2023 passed by the respondents will indicate that the refund claim of the petitioner has also been rejected on the ground that the same is barred by limitation under Section 54 of the CGST Act; in this context, the respondents failed to consider and appreciate the CBIC Notification bearing No. 13/2022-Central Tax dated 05.07.2022 which clearly establishes that the said finding recorded by the respondents is erroneous and that the refund claim of the petitioner in these 2 petitions was not barred by limitation; the said Notification reads as under: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3. SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS NOTIFICATI....
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....d is preferred Date of realization of Foreign Exchange 1st Refund application Revised refund application Due date for filing refund application as per Section 54 (2) years from the date of realization Whether the due date fails within the period of 01.03.2020 to 28.02.2022? Is the refund application time barred as per Notification No. 13/2022-CT dated 05.07.2022*? Apr-18 21-Aug-18 12-Nov-20 31-Mar-21 21-Aug-20 Yes No May-18 21-Sep-18 12-Nov-20 31-Mar-21 21-Sep-20 Yes No Jun-18 21-Sep-18 12-Nov-20 31-Mar-21 21-Sep-20 Yes No Jul-18 16-Nov-18 12-Nov-20 31-Mar-21 16-Nov-20 Yes No Aug-18 14-Nov-18 12-Nov-20 31-Mar-21 14-Nov-20 Yes No Sep-18 14-Dec-18 12-Nov-20 31-Mar-21 14-Dec-20 Yes No Nov-18 13-Feb-19 12-Nov-20 31-Mar-21 13-Feb-21 Yes No Dec-18 13-Feb-19 12-Nov-20 31-Mar-21 13-Feb-21 Yes No Jan-19 11-Mar-19 12-Nov-20 31-Mar-21 11-Mar-21 Yes No W.P. No. 3376/2023 Month for which refund is preferred Date of realization of Foreign Exchange 1st Refund application Revised refund application Due date for filing refund application as per Section 54 (2) years from the date of realization Whether the due dat....
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.... the Circular No. 183/15/2022-GST dated 27.12.2022 and Circular No. 193/05/2023-GST dated 17.07.2023 and in accordance with law. ORDER IN W.P. No. 3420/2023 (i) W.P. No. 3420/2024 is hereby partly allowed. (ii) The impugned Order-in-Appeal dated 12.08.2022 vide Annexure-A passed by the respondents insofar as they relate to rejection of the refund claim of the petitioner pertaining to the issue of 'intermediary / intermediary services' are hereby quashed by holding that the services provided by the petitioner do not fall under the definition of 'intermediary services' and that the same is considered as export of services. (iii) The impugned orders insofar as they relate to rejection of the refund claim of the petitioner on the ground that they are barred by limitation under Section 54 of the CGST Act are hereby set aside by holding that the refund claims of the petitioner are not barred by limitation in the light of the CBIC Notification bearing No. 13/2022-Central Tax dated 05.07.2022 which is applicable to the refund claim of the petitioner; (iv) The respondents are directed to grant/pay refund in favour of the petitioner together with interest under Section 56 of the CGST Ac....