TaxTMI 
TaxTMI 
2025 (6) TMI 1259
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..../ HMD SEAL/ ORDER/ 23-24/196 (for the period October 2021 to December 2021) both dated 10.08.2023 passed by the Deputy Commissioner of State Tax, PUN-APP-E-001, the 4th Respondent herein, upholding the rejection of refund of unutilized Input Tax Credit ("ITC") relating to zero rated supplies (Exports) of goods and services. 3. The facts of the present Petition reflect that the Petitioner had filed two refund applications for the period July to September 2021 and October to December 2021 claiming refund of Rs. 13,75,244 and Rs. 25,88,634 respectively, of the unutilised ITC under Section 54 (3) of Central Goods and Services Act, 2017 ("CGST Act") / Maharashtra Goods and Services Tax Act, 2017 ("MGST Act") read with Rule 89 (4) of Central Goods and Services Rules, 2017 ("CGST Rules") / Maharashtra Goods and Services Tax Rules, 2017 ("MGST Rules") for making zero rated supplies, which came to be rejected by the Original Authority - State Tax officer - Respondent No. 5 and, upheld by the Appellate Authority - Respondent no. 4 on the ground that the recipients of the services located outside India are carrying on business through the "agency" in India i.e. the Petitioner and hence the....
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....ods July to September 2021 and October to December 2021, on identical grounds, claiming refund of unutilized ITC of Rs. 13,75,244/- and Rs. 25,88,634/-, respectively. 9. Respondent No. 5, after issuing a show cause notice to the Petitioner, rejected the above two applications, vide its Order dated 25.08.2022 (for the period July - September 2021), and Order dated 24.08.2024 (for the period October - December 2021), by holding that the Petitioner did not qualify the conditions of export of services by invoking clause (v) of Section 2 (6) IGST Act, which defines "Export of Service" (Exh. K-1 & K-2 to the Petition). 10. Being aggrieved by the orders of Respondent No. 5 rejecting both the refund applications, the Petitioner filed two appeals before Respondent No. 4, which appeals came be rejected by Respondent No. 4. Hence the present Petition. 11. Prior to passing the impugned orders, Respondent No. 4 had issued show cause notice (page 317-323 of the paperbook) calling upon the Petitioner to show cause as to why the Petitioner should not be treated as an "agent", and the foreign recipients be treated as "Principals" of the Petitioner for the following reasons: "In vi....
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....es, we will first analyse the relevant provisions of the IGST Act and the CGST / MGST Act. Section 16 of the IGST Act defines "Zero Rated Supply" to mean export of goods or services or both. Section 2 (5) of the IGST Act defines, 'export of goods', which reads thus: "2 (5) Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India." Section 2 (6) of the IGST Act defines, 'export of services', which reads thus: "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;" 14. From the record we find that Respondent No. 4 framed issues in paragraph 17 of the impugned orders. It can be seen from the impugned orders that Responde....
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....pendent contractor but an agent as defined under Section 2 (5) of CGST/MGST Act, as clauses of the agreement and conduct of the parties prove that the foreign recipient has created an agency in India through the Petitioner (last paragraph of page 102). The purported finding of the Respondent No. 4 is based on the following: i. Foreign party exerts control over the Petitioner, the latter being a subsidiary of former. ii. The managerial control vests with foreign recipient and all the decisions of the Petitioner's business shall be taken by foreign recipient. iii. All the expenses incurred by the Petitioner are reimbursed by the foreign recipient and the Petitioner is remunerated on costs plus basis, resulting in a situation of revenue surplus always and, the said mark up is nothing but fixed commission being paid to the Petitioner; iv. Books of accounts of the Petitioner are readily available for inspection and audit to the foreign recipient, as and when needed. v. The relationship between Petitioner and foreign recipient is of group companies, particularly parent and subsidiary, and therefore, there is fiduciary relationship between thes....
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....of goods and rendering of services is subject to value-added taxes or similar levies, these amounts shall be paid by SISA. 2.5 When funds are required in advance to perform the services under this Agreement, HMD India may request an advance from SISA. Such advance shall be adjusted without additional charges or fees. ....................................... 4. Records and Documentation of Actual Cost and Revenues 4.1 To facilitate the calculation of amounts to be invoiced, HMD India shall keep true and accurate books and records in such detail as is necessary to identify the actual costs related to rendering the Services and supply of goods. 4.2 SISA has the right to audit the actual costs of HMD India for the services to determine whether the charges are true and fair under this agreement. The costs of such an audit, including any outside accounting firm assistance, shall be at the sole expense of SISA ............................................ 14. Independent Agreement It is expressly understood that HMD India is an independent contractor, and that neither HMD India nor its officers, directors, employees or ....
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....ovides design and engineering services to its overseas customers on its own account. The Respondents have not found any other person on whose behalf, the Petitioner allegedly supplies goods and services. 26. It is submitted, and correctly in our view, that to qualify as an agent under Section 2 (5) of the CGST/MGST Act, the person has to act on behalf of or representing the other. In such case, there would be an involvement of a 3rd party viz. on whose behalf supply is made. However, in the present case, there are only 2 parties viz. the Petitioner and the recipients and hence, there is no "agency" relationship between the Petitioner and its recipient of services. 27. It is well settled that the agreement has to be read as whole and the intention of parties to agreement is of paramount importance. In absence of a specific agreement/ arrangement that one person is an agent of another acting as a principal, "agency" cannot be created. On the contrary, the agreement categorically states that the Petitioner shall not be an agent of the foreign recipient. 28. It is now well settled that once an expression in any Act has been defined, the said expression will have same meaning a....
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.... by the assessee but the name of the product itself. It is a variety of tea. Further, the term "instant tea" gives a meaning that it is a "tea", which can be prepared/used instantaneously. Merely because the product is known as "instant tea", it does not cease to be known commercially as "tea". Whether tea is consumed as a hot beverage or a cold beverage depending upon one's liking and taste, it does not make any difference in deciding whether it is a tea falling within the definition of Section 3(n) of the Act. In our view, the manner of preparation of tea and the process of manufacture of "instant tea" powder cannot take away "instant tea" out of the definition of "tea" under the Act. Ultimately "instant tea" is produced from the leaves of the plant Camellia Sinensis (L) O. Kuntze. In these circumstances, "instant tea" is covered by the definition of tea within the meaning of Section 3(n). Once "instant tea" falls within the definition of Section 3(n), a cess can be levied on it under Section 25 of the Act. In our view, the Commissioner (Appeals) was right in upholding the order of the Assistant Commissioner but the Tribunal went wrong in holding that "instant tea" is differe....
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.... 4.2 Further, perusal of the Explanation 2 to section 8 of the IGST Act suggests that if a foreign company is conducting business in India through a branch or an agency or a representational office, then the said branch or agency or representational office of the foreign company, located in India, shall be treated as establishment of the said foreign company in India. Similarly, if any company incorporated in India, is operating through a branch or an agency or a representational office in any country outside India, then that branch or agency or representational office shall be treated as the establishment of the said company in the said country. .......................................................................... 4.4 From the perusal of the definition of "person" under subsection (84) of section 2 of the CGST Act, 2017 and the definitions of "company" and "foreign company" under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate "person" under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a subsidiary/ sister concer....
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....s branch or agency or representational office, located in any other country and not incorporated under the laws of the said country, shall also be considered as supply between establishments of distinct persons and cannot be treated as export of services. 32. It is submitted that the said Circular has specifically clarified that the transactions between sister/ group companies, holding/subsidiary companies are not covered under condition (v) to Section 2 (6) of the IGST Act. 33. In the present case, the Petitioner is not a mere establishment of the recipient of services located outside India by reason of supplies being made to sister/ group companies or holding/subsidiary companies. 34. The above Circular is issued by Respondent No. 1. Respondent No. 3 vide its Trade Circular No. 26T of 2021 dated 28.09.2021 has adopted the said Circular dated 21.09.2021 issued by CBIC. It is a settled principle that the Circulars issued by the department are binding on the Respondents. 35. The Hon'ble Delhi High Court in the case of Xilinx India Technology Services (P.) Ltd. Vs. Special Commissioner Zone VIII, 2023 (78) G.S.T.L. 24 (Del.), in identical facts and circumstances, by relyi....