TaxTMI 
TaxTMI 
2024 (8) TMI 1663
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....xure-B) issued by the respondent No.4; (c) Issue a writ, order or directions in the nature of certiorari or any other writ, order or direction of like nature quashing the impugned SCN dated 07.07.2022 bearing File No. GEXCOM/ADJN/GST/ADC/50/2021- ADJN-COMMR-CGST-BENGALURU (N) (Annexure- C), issued by the respondent No.5; (d) For such further and other reliefs, as this Hon'ble Court may deem fit and proper in the nature and circumstances of the case. 2. A perusal of the material on record will indicate that the petitioner is engaged in the business of providing information and technology software and related support services both inside India as well as outside India. It is contended that the petitioner is registered with Karnataka GST Authorities. In the regular course of business and in order to provide services to overseas customers, petitioner entered into contracts with their overseas related entities to provide services on principal-to-principal basis and in order to establish this, petitioner has produced contracts and agreements dated 10.06.2016 and 17.05.2018 respectively. It is contended that the petitioner is rendering software services and relate....
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....dated 07.07.2022 to the petitioner calling upon it to show-cause as to why recovery should not be made from the petitioner in terms of the orders passed by the 2nd respondent - appellate authority. 7. In the first instance, the petitioner filed the present petition assailing the impugned show cause notices and the impugned order by preferring the present petition on 21.07.2022. During the pendency of the petition, the 5th respondent passed the impugned ex-parte order at Annexure-AG dated 26.07.2022 reiterating the earlier impugned order dated 18.05.2022, pursuant to which, the petitioner filed an amendment application I.A.2/2022 incorporating additional pleadings and prayers, which was allowed by this Court vide order dated 25.08.2022. Under these circumstances, the petitioner is before this Court by way of the present petition. 8. The respondents have filed their statement of objections disputing and denying the various contentions urged by the petitioner and seek to support the impugned orders and notices and have sought for dismissal of the petition. 9. The petitioner has filed its rejoinder to the statement of objections disputing the various contentions urged by the r....
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....nd, the petitioner had produced FIRAs which would clearly establish the receipt of the export proceeds before the 3rd respondent who had considered and accepted the same, while passing the refund sanction order; so also, subsequent to sanction of refund, the petitioner had submitted the eBRCs as can be seen from the email at Annexure-J dated 15.01.2021 submitted by the petitioner; similarly, petitioner had also produced the requisite CA certificate which co-related to the FIRAs already produced by the petitioner along with the refund applications. The cumulative effect of the aforesaid documents, facts and circumstances clearly establish the receipt of export proceeds by the petitioner and mere non-submission of FIRCs along with the refund application could not have been made the basis by the respondents 2 and 5 to set aside the refund sanction order which had been correctly and properly passed by the 3rd respondent after careful consideration and appreciation of the material on record. (ii) The respondents 2 and 5 failed to consider and appreciate that in the FIRAs, the location was mentioned by the petitioner as Haryana instead of Bengaluru only for the purpose of admini....
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...., it is only a further technical objection, of the said form not mentioning the advanced authorization number in the initial copies of the same but supplied later on, could have been condoned. It is neither ARE-1s have not been filed nor there is a doubt about copy of ARE-1s or the authenticity or genuineness thereof. The decision of the Policy Relaxation Committee insisting on the bill of export was not countenanced for the reason that in the earlier occasions, Policy Relaxation Committee was ready and willing to consider the decision provided there is a proof of fulfillment of export obligation. 9. In this regard, it is beneficial to refer to the order of the Policy Relaxation Committee in some of the cases where the decision has been taken to waive the requirement of bill of export for discharge of export obligation against advance authorization provided there is a corroborative evidence i.e., ARE-1/excise attested invoice bearing the details of advance authorization/file number under which goods were removed for discharge of export obligation is made available, the RA is directed to accept such documents in lieu of bill of export. RA is also directed to ensure that the....
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.... Chennai under shipping bill No. 37 dated 12.01.1997. On the goods so exported, the petitioner was eligible to claim drawback as per the Drawback Schedule published by the Government of India as export incentive. Accordingly, the petitioner claimed a drawback of Rs. 63,341/-, while filing their shipping bill. On scrutiny, the said amount was sanctioned and payment was made on 06.01.1998. 3. While so, on 01.01.2003, a show cause notice was issued to the petitioner calling upon them as to why the drawback granted should not be recovered in the absence of receipt of sales proceeds for the goods exported. The fact remains that the petitioner had realised the sale proceeds, but there was some delay in obtaining the bank certificate of export and realisation. Though personal hearing was fixed to adjudicate the show cause notice, by then the petitioner's premises was shifted and they had no notice of the proceedings and the 3rd respondent passed an order on 14.07.2004 confirming the demand raised on the petitioner. On the petitioner receiving the copy of the order passed by the 3rd respondent in the new address, they addressed the Deputy Commissioner of Customs [Drawback], vi....
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....have perused the Writ Petition and all Annexures thereto. We have perused both orders. The Commissioner of Income Tax (Appeals) has referred to the arguments of the petitioners that in the instant case, the original and duplicate copies of ARE-1 were lost after export of the consignment. A police complaint was also lodged by the petitioners. The documents could not be recovered. The Commissioner of Income Tax (Appeals) has referred to the order of the lower authority rejecting the claim only on the ground that the documents, namely, ARE-1 are not placed on record. He took the view that the condition of submission of original as well as duplicate copies of this form is not mandatory but directory. However, the Commissioner of Income Tax (Appeals) has referred to the procedure prescribed by a Notification that envisages handing over of original and quadruplicate copies of the ARE-1. These are handed over to the exporter by the office of the customs after completion of export procedure. A duplicate copy has to be sent by it to the Rebate Sanctioning Authority either by post or through the exporter. The triplicate copy of this ARE-1 is forwarded to the Rebate Sanctioning Authority by t....
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.... shows compliance with such procedural requirement as furnishing of ARE-1 form in original or duplicate and there is other proof of exports of the goods, then, insistence on compliance with the filing of original or duplicate ARE-1 was totally uncalled for and unjustified. Precisely, the Division Bench of this Court held this in UM Cables Ltd. (supra). The judgment in the field and delivered on 24th October, 2013 was not available and possibly that could be the justification for the view taken by the revisional authority. However, the Division Bench has held as under :- "10. Rule 18 of the Central Excise Rules 2002 empowers the Central Government by a notification to grant a rebate of duty paid on excisable goods or on materials Used in the manufacture or processing of such goods, where the goods are exported. The rebate under Rule 18 shall be subject to such conditions or limitations if any, and the fulfilment of such procedure as may be specified in the notification. Rule 18, it must be noted at the outset, makes a clear distinction between matters which govern the conditions or limitations subject to which a rebate can be granted on the one hand and the fulfilment of su....
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.... 11. The Manual of Instructions that has been issued by the CBEC specifies the documents which are required for filing a claim for rebate. Among them is the original copy of the ARE-1, the invoice and self attested copies of the shipping bill and the bill of lading. Paragraph 8.4 specifies that the rebate sanctioning authority has to satisfy himself in respect of essentially two requirements. The first requirement is that the goods cleared for export under the relevant ARE-1 applications were actually exported as evident from the original and duplicate copies of the ARE- 1 form duly certified by customs. The second is that the goods are of a duty paid character as certified on the triplicate copy of the ARE-1 form received from the jurisdictional Superintendent of Central Excise. The object and purpose underlying the procedure which has been specified is to enable the authority to duly satisfy itself that the rebate of central excise duty is sought to be claimed in respect of goods which were exported and that the goods which were exported were of a duty paid character. 12. The procedure which has been laid down in the notification dated 6 September 2004 and in CB....
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....duty has been paid on the goods and that the goods have been examined. Part B contains a certification by the officer of the customs of the shipment of the goods under his supervision." 9. In view of this authoritative pronouncement of the Division Bench of this Court and nothing contrary thereto being pointed out, we are of the opinion that the order passed by the Revisional authority is unsustainable. It is manifestly illegal and erroneous. It is also vitiated by a non-application of mind to the vital materials, namely, the shipping bills and which contain the endorsement necessary for recording a finding that the goods were indeed exported by the petitioners. The date of the ARE-1 has also been mentioned there with other details. In such circumstances, the view taken by the revisional authority cannot be sustained. The Writ Petition is allowed. The order passed, namely, Order In Original and which is confirmed by the revisional authority on 16th August, 2011 are both quashed and set aside. The order of the Commissioner of Income Tax (Appeals) dated 14th September, 2009 is restored. The Writ Petition is allowed in these terms. Rule made absolute accordingly. No orders as....
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.... the above discussion, the following order is passed. ORDER 06(a) The appellants are directed to produce the BRC to the lower authority for verification. (b) The lower authority is directed to verify the same as per the guidance given in para 04.1 and allow the duty drawback if any as per law. (c) The appeal is disposed of on the above terms." 8. Perusal of the above order would show that the Bank Realisation Certificate produced before the said Appellate Authority was directed to be accepted as a proof of export, if all required particulars are available therein. The Appellate Authority has also pointed out that such Certificate produced, though not in a prescribed form, can be accepted as a proof of export. 9. Admittedly, the Revenue has not challenged the said order and on the other hand, after such remand, the Original Authority conducted the denovo proceedings and once again ordered recovery of the drawback amount without accepting the case of the petitioner. 10. Perusal of the order of the Original Authority would show that there is no discussion or finding given with regard to the Bank Realisation Certificate referred ....
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....(BRC) or Foreign Inward Remittance Certificates (FIRC) is required in case of export of services whereas, in case of export of goods, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices is required to be submitted along with the claim for refund. It is therefore clarified that insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon. (xi) A perusal of the aforesaid facts and circumstances comprising of the material on record and the principles enunciated in the aforementioned judgments and the Circular dated 18.11.2019 is sufficient to come to the conclusion that respondents 2 and 5 clearly fell in error in setting aside the refund sanction order passed by the 3rd respondent and rejecting the refund claim of the petitioner and making a demand from him by passing the impugned orders which are illegal, arbitrary and without jurisdiction or authority of law and the same deserve to be set aside. (xii) The respondents 2 and 5 have come to the conclusion that the ....
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....sequently revised w.e.f. 1 April 2008 till December 2010 and further extended w.e.f. 1 January 2011; WHEREAS, pursuant to APA entered between Provider and CBDT, Parties are desirous of giving effect to the terms of the APA and accordingly, intend to amend and restate the Original Agreement to read as set forth herein with effect from April 1, 2009. NOW, THEREFORE, based on the above premises and in consideration of the mutual covenants and agreements contained herein, Parties agree as follows: TERMS AND CONDITIONS OF THE AGREEMENT 1. SCOPE OF SERVICES 1.1. All the work performed by the Provider for Recipient shall be governed by this Agreement. Further, details and special provisions may be set forth in specific Project Agreement(s). which may be drawn up in respect of individual software development projects between the Parties. Project Agreements will normally concentrate on software development process. targets and management. Where no separate Project Agreements exists, the terms of this Agreement is applied on the Services provided by the Provider together with the global management product and customer process procedures of Recipie....
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....ition of the Services. 1.5.6. Provider shall perform unit testing' on the software modules developed by it and shall prepare test reports. After testing each individual module, all the tested modules will be sent to Recipient for integration and validation. Recipient shall, then, carry out system testing and various other tests in a specially designed testing environment. 1.6.CONTROL AND THE PROJECT MANAGEMENT 1.6.1. Recipient's standard processes/ practices for provision of services covered within the scope of this Agreement shall be applied by the Provider for the purpose of the work done under the scope of this Agreement. 1.6.2. Recipient has decide on the R&D projects, their start and termination. The Provider shall assist the Recipient in making these decisions. 1.6.3. Provider shall undertake project management activities and control/ supervise the entire process in relation to the development/ testing of the software module(s) and shall provide regular update to the Recipient for it to analyse the progress of the project against the project plan. 1.6.4. Provider shall promptly report to Recipient if it ap....
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....cluding depreciation and amortisation expenses relating to the assets used in the provision of the Services. Cost will also include any foreign exchange loss, either directly identifiable or reasonably allocable towards the Services under this Agreement. For the removal of doubt, it is clarified that in case of foreign exchange gain (either directly identifiable or reasonably allocable towards the Services), the same shall be reduced from the Service Fee for the purpose of invoicing to the Recipient. ● In addition, where any stock based compensation plan has been extended to the employees of the Provider engaged in the provision of the Services by the ultimate parent entity of Nokia Group or the Recipient or any other Nokia Group entities responsible for such stock based compensation plan, Provider will include the annual estimate cost/expense related to such stock based compensation plan in the cost base for purpose of applying Service Mark-up and billing to the Recipient, unless and until such provision (or estimate thereof) is already included in the operating expenses of the Provider. Costs exclude: ● Interest expense, pre-operating expens....
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....a particular financial year is more than Ninety (90) days, the Provider shall be entitled to receive interest at the rate of I percent per month on the aggregate invoice amount of the financial year for excess realisation period. For the purpose of calculation of interest on late realisation, a month shall be assumed to comprise of 30 days. 2.2.5. Financial year ("FY") means twelve (12) month period starting April 1 of the calendar year and ending on March 31 of the following calendar year, as followed by the Provider for its local statutory and tax reporting. 2.2.6. This Agreement is effective April 1, 2009 and supersedes the terms of the Original Agreement. In lieu of this, as per the APA terms agreed by the Provider, for FY 2009-10 to 2014-15 (for which statutory books of accounts are already closed) and period of FY 2015-16 before the date of signing of the APA, the Provider shall raise additional invoice(s) (hereinafter referred to as the "Additional Invoice(s)") on the Recipient of the Service Fee equivalent to the difference between the terms of Consideration defined under clause 2.1 of this Agreement vis-à-vis the Consideration already invoiced as p....
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....he 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 Circular No. 159/15/2021-GST 3 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". 3.5 Sub-contracting for a service is n....
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....serve to be set aside. In other words, the material on record clearly establishes that the activities of the petitioner is of software development and support as well as project management which are rendered by the petitioner on its own account and cannot be considered as intermediary services since the same are not services of arranging or segregating any other supply. (xii) In Genpact India (P) Ltd. v. UOI - 2022 SCC OnLine P&H 425, the Hon'ble Punjab & Haryana High Court held as under :- 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 be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an "intermediary" is to mediate between two parties i.e. the principal service provider (the 3rd party) and the beneficiary (the agents principal) who ....
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.... a third party, the same would not result in the petitioner falling within the definition of 'intermediary' under Section 2(13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party. (xiv) Similarly, in Ohmi Industries Asia (P) Ltd. v. Commr. (CGST) - 2023 SCC OnLine Del 2029, reiterating the view held in Ernst & Young (supra), the Delhi High Court held as under :- 15. The term intermediary is defined under Section 2(13) of the IGST Act as under: "2(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." 16. It is also apparent form the plain language of Section 2(13) of the IGST that intermediary is one that arranges or facilitates supply of goods and services. In the present case, there is no dispute that the petitioner had rendered market research services on its own; there is no allegatio....
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....es. Accordingly, these two separate persons would not be considered as "merely establishments of a distinct person in accordance with Explanation I in section 8". 5.2. Therefore, supply of services by a subsidiary/sister concern/group concern, etc. of a foreign company, which is incorporated in India under the Companies Act, 2013 (and thus qualifies as a 'company' in India as per Companies Act), to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub- section (6) of the section 2 of the IGST Act, 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation I of section 8 of IGST Act 20 I7. Similarly, the supply from a company incorporated in India to its related establishments outside India, which are incorporated under the laws outside India, would not be treated as supply to merely establishments of distinct person under Explanation 1 of section 8 of IGST Act, 2017. Such supplies, therefore, would quality as 'export of services', subject to fulfilment of other conditi....