TaxTMI 
TaxTMI 
2025 (12) TMI 633
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....s and beyond the SCNs dated 10.02.2023; b. To issue a Writ of Mandamus holding that the Petitioner is eligible to claim refund of Accumulated Input tax credit in terms of Section 16 of the IGST Act read with Section 54 of the CGST Act; c. To issue a Writ of Mandamus holding that the services provided by the Petitioner are in the nature of export of services; d. To issue a Writ of mandamus holding that the services provided by the Petitioner do not amount to a local supply and therefore are not liable for GST; e. To issue Order(s), Directions, Writ(s) or any other relief as this Hon'ble Court deems it fit and proper in the facts and circumstances of the case in the interest of justice." In W.P. No. 3689/2024, petitioner seeks for the following reliefs: "a. To issue order(s) or directions in the nature of Certiorari quashing the Show Cause Notice issued in Form GST DRC-01 with reference No. DCCT(AUDIT)-5.1/DGSTO-5/GSTADT(18-19)/SCN-57/2023-24 dated 01.01.2024 annexed at Annexure-A as issued without jurisdiction, arbitrary, vague, and in contradiction to the provisions of the KGST/CGST Act; b. To issue a Writ of Mandamus holding....
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....systems. These programs include development new software features and enhancements that improve process work flow and provides quality fixes. The scope of the programs is derived from multiple sources including marketing, service, regulatory, engineering, leadership and product management who are based outside India. It is contended that the work performed by the Bangalore Unit in India is consolidated into an overall software code which is then integrated with the work done by other project teams globally and once the entirety of the program is complete, it is subject to review and verification at the location of the overseas entity. Once the approval process is complete, the software is integrated into the equipment at the location of the overseas entity and intellectual property is created while providing such services belong to the group companies outside India. 2.1 Petitioner contends that the activities being performed by it prior to introduction of GST from 01.07.2017 were governed by the erstwhile Finance Act 1994, during which period, the refund of unutilized credit with respect to export of services carried out by the petitioner for the period from October 2012 to Dece....
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....ndent also sought to create an outward tax liability along with interest and penalties on the ground that the services provided by the petitioner did not qualify as export of services but were instead provided to its branch in Goa. The respondent also contended that as per the Notification No. 4/2019 - IGST dated 30.09.2019, petitioner was providing R & D services and had violated the provisions pertaining to place of supply of service by misclassifying domestic supply as export of services. Under these circumstances, petitioner has preferred the subsequent petitions in W.P. No. 3689/2024 and W.P. No. 21146/2024 challenging the impugned show cause notices dated 01.01.2024 and 31.05.2024 respectively. 3. The respondent has filed its statement of objections disputing and denying the claim of the petitioner and supporting the impugned orders and show cause notices and has sought for dismissal of the petitions. 4. Since common questions of law and facts arise for consideration in all the petitions, they are taken up together for consideration and disposed of by this common order. 5. Heard learned Senior counsel for the petitioner and learned counsel for the respondent - revenu....
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.... 7. Rule 89 of the CGST Act, 2017-Application for refund of tax, interest, penalty, fees or any other amount; 8. Rule 6A of Service Tax Rules, 1994 - Export of Service; 9. Rule 4 of place of Provision of Service Rules, 2012-Place of Provision of Performance based services. Relevant Decisions and clarifications 10. Genpact India (p) Ltd. v. Union of India- 2023 (68) G.S.T.L 3 (P&H); 11. Genpact India (p) Ltd. v. Prl. Commissioner (GST) - 2023 SCC OnLine P & H 7161; 12. Circular No. 161/17/2021-GST dated: 20.09.2021; 13. Linde Engineering India Pvt. Ltd. V. Union India-2022(57) GSTL 358 (Guj); 14. Magad Sugar and Energy Ltd. v. The State if Bihar and Ors - (2021) 6 SCR 1094; 15. Taxation of Services: An Education Guide-Rule 4; 16. Notification No. 4/2019-Integrated Tax, dated: 30.09.2019; 17. Circular No. 309/1/2018-S.T, dated: 04.05.2018; 18. Circular No. 118/37/2019-GST, dated: 11.10.2019; 19. C.C, C.E & S.T., Bangalore (Adjudication) vs Northern Operating System Pvt. Ltd., - 2022(61) G.S.T.L. 129 (S.C.); 20. M/s. Samsung Indian Electronics Pvt.Ltd., v. Stat....
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....recipient of services which are the foreign entities located outside India. 12. It is pertinent to note that Circular No. 209/1/2018-ST dated 04.05.2018 states that in case of supply of software services which involves multiple individual activities to be undertaken in India, the place of supply of such services will be the location of recipient of services; further, Circular No. 118/37/2019-GST dated 11.10.2019 specifically clarifies that even in a case where the receiver of service supply sample prototype hardware / test kits, the activity of supplier of service involves a composite supply of software development and testing on the kits and the location of the service receiver would be the place of supply of service, thereby leaving to the sole / unmistakable conclusion that the place of supply for the service undertaken by the petitioner would be the location of recipient of service. 13. The material on record clearly indicates that the payment for such service supplied by the petitioner has been received by it in convertible foreign exchange as can be seen from the EBRCs enclosed along with the refund applications; so also, the condition pertaining to establishment of dis....
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....: "(i) That the petitioner No. 1, which was a 100% subsidiary of Linde AG, Germany, and which was rendering consulting engineering services outside India and claiming the benefit of export of service, without the payment of Service tax; (ii) That during the scrutiny of records of the petitioner No. 1 for the periods 2012-13 to 2014-15, it was found that the petitioner No. 1 was rendering services to other establishments of the Linde Group, more particularly Linde Engineering Gmbh and was raising an invoice in foreign currency; (iii) That the Linde Group Companies, including Linde AG, Germany would be establishments of the petitioner No. 1, and therefore the provision of service by the petitioner No. 1 would not fall within the ambit of 'Export of Service' under Rule 6A of STR and would therefore be and 'exempted service' in terms of the provisions of Rule 2(e) of the Cenvat Rules." 4.4. The petitioner No. 1 submitted its reply dated 13-5- 2016 as under: "(i) The transaction of provision of service by the petitioner No. 1 to the recipient outside India would clearly fall within the ambit of Rule 3 of the Place of Provision of Service Rule....
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....eading of the provisions of Rule 6A of the Service Tax Rules, 1994 (hereinafter referred to as "STR") read with the provisions of Section 65B(44) of the Act, the consulting engineering services rendered outside India by the Petition No. 1 to any other subsidiary of Linde AG or holding company would qualify as 'Export of Services' as contended by the Petitioner, or Exempted Service under Rule 2(e) of the Cenvat Rules, thereby requiring proportionate reversal of Credit under Rule 6A of the STR as is contended by the Department?" 3. Accordingly, it is submitted that action of the respondent in issuing show cause notice is without jurisdiction and contrary to the provisions of Rule 6A of Sales Tax Rules read with Section 65B(44) of the Act. 4. Considering the above and upon reading the contents of the show cause notice impugned in juxtaposition to statutory provisions, we are inclined to issue NOTICE returnable on 27th September 2018. Meanwhile, there shall be ad-interim relief in terms of paragraph 9(b) of the petition. Direct service is permitted." 9. The facts of the case are not in dispute that the petitioner No. 1, who is 100% subsidiary of Linde AG, Ger....
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....o receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. 'Explanation 2. - For the purposes of this clause, the expression "transaction in money or actionable claim" shall not include- (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out- (a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facili....
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....hort-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "thirty months", the words "five years" had been substituted. Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of thirty months or five years, as the case may be." (v) Rule 6A of the Rules, 1994 reads thus: "Export of services. - '6A. (1) The provision of any service provided or agreed to be provided shall be treated as ex....
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....he provider of output service, in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be:" 11. On perusal of the above provisions of the Act, 1994 and the Rules, 1994 read with Rules, 2004, it emerges that Rule 6A of the Rules, 1994 provides that services rendered would be treated as "Export of services" when clause (a) to clause (d) refers to provider of service is located in the taxable territory and recipient of service is located outside India and the service is not a service specified in Section 66D of the Act and the place of the provision of the service is outside India and as per clause (e) the payment for such service has been received by the provider of service in convertible Foreign Exchange. It emerges that the petitioner is fulfilling all the conditions, however, so far as the clause (f) of Rule 6A of Rules, 1994 is concerned, it provides that the provider of service and recipient of service are not merely establishments of a distinct person in accordance with Item (b) of explanation 3 of clause (44) of Section 65B of the Act. As per clause (44) of Section 65B of the Act, 1994 "service" means any activity carried out by a person for anothe....
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....994 and Clause (f) of Rule 6A of the Rules, 1994 would not be applicable in the facts of the case as the petitioner No. 1, who is the provider of service and its parent Company, who is the recipient of services cannot be said to be merely establishment so as to be distinct persons in accordance with Item (b) explanation 3 of Clause (44) of Section 65B of the Act, 1994. 13. In such circumstances, the respondents, would not have any jurisdiction to invoke the provisions of the Act, 1994 read with Rules, 1994 to bring the services rendered by the petitioner No. 1 to its parent Company within the purview of levy of service tax under the provisions of the Act, 1994. 14. Moreover, the impugned show cause notice is also not tenable in law as the same is issued invoking Section 73 of the Act, 1994 for extending the period for the issuing the Notice on the ground of alleged wilful misstatement or suppression of the facts on the part of the petitioner No. 1. The petitioners cannot be said to have made any wilful misstatement or suppressed any fact as the petitioners cannot be made liable for levy of service tax by wrongly treating the petitioners and its parent Company as e....
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....ashid case, namely, K.S. Rashid & Son v. Income Tax Investigation Commission which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, "unless there are good grounds therefor", which indicated that alternative remedy would not operate as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances. 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh as under: "But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies." 18. This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani and was affirmed and followed in the following words: "The passag....
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....arious decisions of the Apex Court, which are based on the facts of each case, would not be applicable as the impugned show cause notice is held to be issued without jurisdiction as the respondents could not have issued the same invoking the provisions of Section 73 of the Act, 1994 read with Section 65B(44) and Rule 6A of the Rules, 1994. 17. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned show cause notice dated 10-11-2017 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent with not order as to costs." 15. In Northern Operating System's case supra, the Apex Court held as under:- Analysis and Conclusions 33. The issue which this Court has to decide is whether the overseas group company or companies, with whom the assessee has entered into agreements, provide it manpower services, for the discharge of its functions through seconded employees. 34. The contemporary global economy has witnessed rapid cross-border arrangements for which dynamic mobile workforces are optimal. To leverage talent within a transnational group, employees are frequently seconded to affiliated or group ....
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.... of this case we find that on request/requisition from MSAS the applicant deputes its staff. The request comes from MSAS depending upon its requirement. Generally, occasions do arise when MSAS needs the expertise of the staff of MSCo. In such circumstances, generally, MSAS makes a request to MSCo. A deputationist under such circumstances is expected to be experienced in banking and finance. On completion of his tenure he is repatriated to his parent job. He retains his lien when he comes to India. He lends his experience to MSAS in India as an employee of MSCo as he retains his lien...." 36. In Eli Lilly [CIT v. Eli Lilly & Co. (India) (P) Ltd., (2009) 15 SCC 1] the appellant was incorporated in India under the Companies Act, 1956 and was a joint venture between M/s Eli Lilly, Netherlands B.V. and Ranbaxy Laboratories (Ltd.). The foreign partner had seconded four expatriates to the Indian joint venture. The employees, however, continued to remain on the rolls of the foreign company. They received home salary outside India from the foreign partner. The joint venture company deducted tax under Section 192(1) in respect of the salary paid by it to the expatriates in India, an....
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.... 39. In D.C. Dewan Mohideen Sahib & Sons v. United Beedi Workers' Union [D.C. Dewan Mohideen Sahib & Sons v. United Beedi Workers' Union, 1964 SCC OnLine SC 283 : (1964) 7 SCR 646 : AIR 1966 SC 370], the Court analysed the sample agreement which disclosed the facts of the case before it, and, for the first time, held that the "control" test is not necessarily determinative to discern the real employer : (AIR p. 375, para 12) "12. ... There is in our opinion little doubt that this system has been evolved to avoid Regulations under the Factories Act. Further there is also no doubt from whatever terms of agreement are available on the record that the so-called independent contractors have really no independence at all. As the appeal court has pointed out they are impecunious persons who could hardly afford to have factories of their own. Some of them are even ex-employees of the appellants. The contract is practically one-sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so-called contractors having no right to insist upon the supply of raw materials to him. The so-called independent contractor is even bound not t....
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....killed "hand". It reflects a state of society in which the ownership of the means of production coincided with the profession of technical knowledge and skill in which that knowledge and skill was largely acquired by being handed down from one generation to the next by oral tradition and not by being systematically imparted in institutions of learning from universities down to technical schools. The control test postulates a combination of managerial and technical functions in the person of the employer i.e. what to modern eyes appears as an imperfect division of labour. [See Prof. Kahn-Freund in (1951) 14 Modern Law Review 505.]' 27. It is, therefore, not surprising that in recent years the control test as traditionally formulated has not been treated as an exclusive test. 28. It is exceedingly doubtful today whether the search for a formula in the nature of a single test to tell a contract of service from a contract for service will serve any useful purpose. The most that profitably can be done is to examine all the factors that have been referred to in the cases on the topic. Clearly, not all of these factors would be relevant in all these cases or have the sam....
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....independent professional piano player who gives music lessons to persons who visit her premises. Equally, a variety of cases arise between a ship's master, a chauffeur and a staff reporter, as against a ship's pilot, a taxi driver and a contributor to a newspaper, in order to determine whether the person employed could be said to be an employee or an independent professional. The control test, after moving away from actual control of when and how work is to be performed to the right to exercise control, is one in a series of factors which may lead to an answer on the facts of a case slotting such case either as a contract of service or a contract for service. The test as to whether the person employed is integrated into the employer's business or is a mere accessory thereof is another important test in order to determine on which side of the line the contract falls. The three-tier test laid down by some of the English judgments, namely, whether wage or other remuneration is paid by the employer; whether there is a sufficient degree of control by the employer and other factors would be a test elastic enough to apply to a large variety of cases. The test of who owns the a....
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.... (b) provides service, (c) directly or indirectly, (d) in any manner for recruitment or supply of manpower, (e) temporarily or otherwise. 44. The question is what are the services provided to the assessee, and by whom? Do they include the provision of services, through employees, by its overseas group companies or affiliates? After 1-7-2012, the definition of "service" underwent a change. Except listed categories of activities excluded from, or kept out of the fold of the definition, every activity virtually is "service". Now, by Section 65(44), "service" means: (a) any activity, (b) carried out by a person for another, (c) for consideration, and (d) includes a declared service (the term "declared service" is defined in Section 66-E). 45. Section 65(44), however, excludes from its sweep [by clause (b)], "a provision of service by an employee to the employer in the course of or in relation to his employment". The assessee contends that the secondment agreement has the effect of placing the overseas employees under its control, so to say, and enables it to require them to perform the tasks for its pu....
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....ain tasks to the assessee, including back office operations of a certain kind, in relation to its activities, or that of other group companies or entities. (ii) The assessee is paid a mark up of 15% of the overall expenditure it incurs, by the overseas company (Clause 2, read with Attachment 1 of the Service Agreement). (iii) By the Secondment Agreement, the parties agree that the overseas employee is temporarily loaned to the assessee (Article I read with the Schedule). (iv) During the period of secondment, the assessee has control over the employee i.e. it can require the seconded employee to return, and likewise, the employee has the discretion to terminate the relationship (Article II). (v) The overseas employer (group company) pays the seconded employee, which is reimbursed to the overseas company, by the assessee (Article III). (vi) The assessee is responsible for the work of the seconded employee i.e. the overseas employer, during the secondment period, is absolved of any liability for the job or work of its seconded employees (Article VII). (vii) The secondment is for a specified duration, and the employment with the ass....
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....lose look at the terms of the contract, or the agreements. 52. A vital fact which is to be considered in this case, is that the nature of the overseas group companies business appears to be to secure contracts, which can be performed by its highly trained and skilled personnel. This business is providing certain specialised services (back office, IT, bank related services, inventories, etc.). Taking advantage of the globalised economy, and having regard to locational advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimise the economic edge (be it manpower or other resources availability) to perform the specific tasks given it, by the overseas company. As part of this agreement, a secondment contract is entered into, whereby the overseas company's employee or employees, possessing the specific required skill, are deployed for the duration the task is estimated to be completed in. This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the p....
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....t, they return to their overseas employer, or are deployed on some other secondment. 56. This Court, upon a review of the previous judgment in Sushilaben Indravadan [Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151 : (2021) 3 SCC (Civ) 777 : (2021) 3 SCC (Cri) 118 : (2021) 2 SCC (L&S) 409] held that there is no one single determinative test, but that what is applicable is: "32. ... a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight. (SCC pp. 179-80, para 32)" (emphasis supplied) 57. Taking a cue from the above observations, while the control (over performance of the seconded employees' work) and the right to ask them to return, if their functioning is not as is desired, is with the assessee, the fact remains that their overseas employer in relation to its busin....
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....for similar reasons, that the orders of CESTAT, affirmed by this Court, in Volkswagen and Computer Sciences Corporation, are unreasoned and of no precedential value. 61. In view of the above discussion, it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show-cause notices were issued). Invocation of the extended period of limitation 62. The Revenue's argument that the assessee had indulged in wilful suppression, in this Court's considered view, is insubstantial. The view of a previous three-Judge ruling, in Cosmic Dye Chemical v. CCE [Cosmic Dye Chemical v. CCE, (1995) 6 SCC 117] - in the context of Section 11-A of the Central Excise Act, 1944, which is in identical terms with Section 73 of the Finance Act, 1994 was that : (SCC p. 119, para 6) "6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent i.e. intent to evade duty is built into these very words. So far as misstatement or suppression ....
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....cation of the extended period of limitation, in this Court's opinion, was unjustified and unreasonable. Resultantly, the assessee is held liable to discharge its service tax liability for the normal period or periods, covered by the four SCNs issued to it. The consequential demands therefore, shall be recovered from the assessee. 67. The impugned common order [Northern Operating Systems (P) Ltd. v. CCE & Service Tax, (2022) 98 GSTR 238 : 2020 SCC OnLine CESTAT 401] of CESTAT is accordingly set aside. The Commissioner's orders-in-original are accordingly restored, except to the extent they seek to recover amounts for the extended period of limitation. The demand against the assessee, for the two separate periods, shall now be modified, excluding any liability for the extended period of limitation. The appeals are partly allowed, to the above extent, with no order on costs. 68. The Appeals partly allowed, to the above extent, with no order on costs. 16. The respondent placed reliance upon Notification No. 4/2019-Integrated Tax dated 30.09.2019 wherein the Government had specified the place of supply of services related to Research and Development (R & D) ....
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....ical equipment, enhancements therein to improve workflow, productivity, and quality fixes. = Discovery and development of molecules by pharmaceutical sector for medicinal use, designing of compound, evaluation of the drug metabolism, biological activity, manufacture of target compounds, stability study and long-term toxicology impact. 19. It is borne out from the material on record that the description of supply under the heading "Integrated discovery and development" is not applicable to the services provided by the petitioner; so also, the petitioner's services have no connection to molecule development for medicinal use or the toxicology impact of drugs; instead, the petitioner focuses on improving the technological aspects of software programs installed in medical equipment, enhancing the functionality of these devices. 20. The material on record discloses that the Revisionary Notice in GST RVN-01 dated 05.10.2023 issued by the respondent, annexed as Annexure-Q1 vide I.A.No.1/2024, the respondent has denied the benefit of Notification No. 04/2019 - Integrated Tax dated 30.09.2019, pertaining to the supply of research and development service related to the pharma....
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....etitioner which detailed the description of the activity undertaken. With respect to many invoices, the description of the activity provided in the said excel sheet was as "service export". Further, with respect to few invoices, specifically, Invoice No. KA/2122/I/041941 dated 22.09.2021, the petitioner provided a description as "Non INR Cross Charge". It was also clarified by the petitioner that the charges were for employee education, training, and compensation and benefits (C&B) expenses, which were incurred as part of the R & D services provided by the petitioner to its foreign affiliates. 23. It is contended that the respondent interpreted all services provided by the petitioner as services rendered in India, applying this reasoning provided for a few invoices which stated 'Employee training, C & B charges etc.,' against all the export invoices. In addition, the primary activity undertaken is provision of research and development services and the associated costs for compensation, benefits, and employee education and training are ancillary to the R&D services. The said services provided is in the nature of a composite supply with the research and development services being ....
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....lementation of the new Technology, which the collaborator shall render to GE Healthcare. The reimbursement shall be made even if the resultant New Technology is not commercially exploitable or exploited by GE Healthcare. Provided always that no reimbursement shall be made unless Collaborator has obtained all relevant Indian Government approval for making royalty payment to GE Healthcare. 26. It is therefore clear that by applying the general test of 'substance over form', irrespective of the nomenclature used in the invoice, the facts of the case show that the transaction is an export of service. Therefore, the place of supply for such composite services is the location of the service recipient as per Section 13(2) of the IGST Act i.e., the location of the foreign entity in the present case. 27. Insofar as W.P. No. 3689/2024 and W.P. No. 21146/2024, the respondent issued Show Cause Notices for the period 2018-19 and 2019-20 respectively, proposing to reject the refund previously sanctioned. The refund was proposed to be rejected on the ground that since the services provided by the petitioner were rendered to its branch in Goa, the services are classifiable as domestic rather....
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....onal 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 whether the petitioner would be covered under the expression "intermediary" as defined under the provisions of the IGST Act and consequently the BPO services rendered by the petitioner under the MSA (annexure P1) be treated as "intermediary services" ? 22. For adjudication of such issue it would be necessary to advert to certain relevant statutory provisions : Integrated Goods and Services tax Act, 2017 S. 2. Definitions.-In this Act....
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.... 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, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held. (6) Where any services referred to in sub-section (3) or sub- section (....
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....ansportation 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 recipient of services through internet is in the taxable territory ; (b) the credit card or debit card or store value card or charge card or smart card or any other card by whi....
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.... 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 such tax or any other amoun....
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....e of supply" of services is the location 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". The relevant extract of the recitals and the clauses in question read as follows : Master Services Sub-....
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....ich are hereby acknowledged, the parties hereby agree as follows : Article 3 GI'S obligations and services In addition to any other obligations set forth below in this agreement, GI shall be obligated to provide the following services : 3.1 Managing new and existing customer relationships, GI shall be responsible for performing all functions necessary to obtain new GI customers for whom services shall be performed by the provider and by the other GI provider affiliates and for maintaining and expanding all existing GI customer relationships. Such functions shall include, but not be limited to, scheduling regular meetings with existing and potential GI customers ; developing presentations for GI customers on existing and new product and service offerings; preparation for, and attendance at, appropriate conventions and industry meetings ; handling all public relations and advertising matters, etc. 3.2 GI account representatives. GI shall at all times have one or more specific senior personnel identified and appointed to serve each GI Customer (each, a "GI Account Representative") who shall be responsible for managing the relationship with each ....
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....ritten approval from the GI customer and GI and, if required by applicable law, the applicable data subject. All provider personnel with process GI customer personal data only on a need-to-know basis in connection with the performance of this agreement. Article 5 services 5.1 The customer agreement and customer statements of work are by reference incorporated into the terms of this agreement and standard operating procedures. (a) On or before the service commencement date for any customer statement of work, each provider shall deliver a draft of the standard operating procedures for the services which will be finalized and adopted by the provider. (b) Subject to the terms of this agreement, the parties shall comply at all times with the standard operating procedures. (c) Each provider shall update the standard operating procedures from time to time to reflect changes in the services being delivered. 5.2 Disaster recovery services. Provider shall provide to GI the disaster recovery assistance, co-operation and services, if any, that are relevant. Each provider shall be responsible for business continuity planning or disaster reco....
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....rdance with internationally accepted principles as agreed between the parties from time to time. (iv) Any adjustments made by GI for compensating the support region ((ii), (iii) and (iv) together referred to as "GI service fee"). Article 16 termination 16.1 Termination for cause. If a provider fails to perform any of its material obligations under this agreement or a customer statement of work and does not cure such failure within the cure period mentioned in such customer statement of work or where no such cure period is mentioned in a customer statement of work, within 30 days of receipt of a notice of default from GI, then GI may, by giving notice to the provider within 120 days (or such number of days as mutually agreed) of the last day of such cure period, terminate such customer statement of work as of the date specified in such notice of termination. 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 "intermediary" ;- First, the relationship between the parties must be that of a principal- agency relationship. Second, the person must ....
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....s 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. 29. The aforesaid judgment of the Punjab and Haryana High Court has attained finality as is clear from the subsequent judgment in Genpact (2)'s case supra, wherein the decision of the revenue / Department not to challenge the judgment in Genp....