TaxTMI 
TaxTMI 
2026 (6) TMI 375
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.... passed by the Deputy Commissioner of State Tax (MUMBAI-LTU_515) whereby the refund claimed u/s 54(1) & Rule 89 of the Maharashtra Goods & Services Tax Act, 2017 and Maharashtra Goods & Services Tax Rules, 2017 (hereinafter referred to as MGST Act and MGST Rules) were rejected. The details of the impugned orders refusing the refunds in favour of the Appellant pertaining to the tax periods spanning from January 2022 to June 2022 are as follows: - a) In appeal No. APL/2/PB/2026 for the period 01/01/2022 to 31/01/2022 of refund amounting to Rs. 7,81,12,995/- b) In appeal No. APL/3/PB/2026 for the period 01/02/2022 to 28/02/2022 of refund amounting to Rs. 1,12,62,629/- c) In appeal No. APL/4/PB/2026 for the period 01/03/2022 to 31/02/2022 of refund amounting to Rs. 1,30,15,941/- d) In appeal No. APL/5/PB/2026 for the period 01/04/2022 to 30/04/2022 of refund amounting to Rs. 1,47,89,813/- e) In appeal No. APL/6/PB/2026 for the period 01/05/2022 to 31/05/2022 of refund amounting to Rs. 1,31,52,277/- f) In appeal No. APL/7/PB/2026 for the period 01/06/2022 to 30/06/2022 of refund amounting to Rs. 38,56,339/- Details of the si....
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....terms and conditions of procurement agreements, and the further facilitation of the supply from the selected suppliers to the Appellant. The role of Dow Europe is not limited to a single transaction but extends to the entire procurement lifecycle. Right from the development of procurement strategies to the final negotiation of contractual terms, and even the reviewing and signing of contracts and purchase orders, Dow Europe is engaged in the process of concluding contracts between the Appellant and the respective third-party suppliers. The Appellant has consistently maintained that these activities are, in substance, in the nature of facilitating the supply of goods between the Appellant and its independent foreign suppliers. (iv) During the relevant period from January 2022 to June 2022, the Appellant, under a mistaken impression that the services received from Dow Europe constituted an 'import of services' as defined under Section 2(11) of the Integrated Goods and Services Tax Act, 2017 ('IGST Act'), proceeded to discharge Integrated Goods and Services Tax (IGST) under the Reverse Charge Mechanism (RCM) on the consideration paid to Dow Europe amounting to INRs 7,81,12,99....
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....ing purchases or similar obligations. E. M/s Dow Europe GmbH (Procurement Hub) is providing services at his own account; therefore, such services come out of the ambit of intermediary services. 6. In all these cases, therefore, the following mixed questions of law and facts arise for determination: - a) Whether the services provided by Dow Europe GmbH (hereinafter referred to as "Dow Europe"), a company incorporated in Switzerland, under a contract entered into with the Appellant, M/s. Dow Chemical International Private Limited, a company incorporated under the laws of India, are to be treated as ancillary services provided in relation to the main service? b) Whether the services provided by Dow Europe GmbH qualify as "intermediary services" within the meaning of Section 2(13) of the Integrated Goods and Services Tax Act, 2017, and consequently attract the provisions of Section 13(8)(b) of the IGST Act, as applicable during the relevant period prior to the amendment dated 30.03.2026? c) Whether the place of supply of the services in question is liable to be determined under Section 13(2) of the Integrated Goods and Services Tax Act, 2017, ther....
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....were being provided by Airbus India to Airbus SAS, France, the Learned Advance Ruling Authority was pleased to hold that such services qualify as "intermediary services". It is a well-settled principle that the manner of remuneration is a key indicator of the nature of services. In numerous cases, arrangements have been classified as intermediary services primarily because the consideration was structured as commission or brokerage, rather than a fixed fee for principal services. (ii) The Appellant further placed strong reliance on Circular No. 159/15/2021-GST dated 20.09.2021 issued by the CBIC. It was submitted that all the pre-requisites for qualification as an 'intermediary' as specified in the said circular are satisfied in the present case. The Appellant argued that there is a minimum of three parties involved [Appellant, Dow Europe, and the foreign supplier(s)], which is the first prerequisite. Secondly, there are two distinct supplies: the main supply of goods from the foreign supplier to the Appellant, and the ancillary supply of facilitation services by Dow Europe. Thirdly, it was argued that Dow Europe is not supplying goods on its own account but is merely arra....
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....ell-settled principle that the manner of remuneration is a key indicator of the nature of services, and a commission-based structure clearly reflects a facilitative role. Reliance was placed on the decision of the Karnataka AAAR in the case of M/s Toshniwal Brothers (SR) Pvt. Ltd. The Appellant also argued that the Respondent has failed to examine the actual nature of services availed in contravention of the principle of substance over form, and that the impugned orders are non-speaking orders passed in gross violation of the principles of natural justice. 7.2 Respondent's Contention The Respondent, through its learned Advocate Ms Shwetal Shepal, advanced the following submissions: (i) At the outset, it was submitted that the present Appeals proceed on a fundamentally erroneous interpretation of Section 2(13) of the IGST Act. The Respondent argued that the Appellant has attempted to portray a procurement outsourcing arrangement as a mere facilitation arrangement between suppliers and Dow India. It was contended that such an interpretation is contrary to the express terms of the Procurement Agreement and the statutory framework governing intermediary services. ....
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...., as Dow Europe supplied services on its own account and received procurement service fees for independently rendering procurement services. (v) The Respondent also argued that the sub-contracting or outsourcing of services on a principal-to-principal basis is not intermediary services, and the Circular itself clarifies this position. It was submitted that the present case is essentially a centralized procurement outsourcing arrangement whereby Dow India outsourced its entire procurement and sourcing functions to Dow Europe GmbH, which functions as the centralized procurement hub within the Dow Group. Finally, the Respondent argued that the refund provisions under Section 54 cannot be invoked to reopen or revisit taxability merely on account of a subsequent change in interpretation, especially after the Appellant itself had initially treated the transaction as an import of services and discharged tax accordingly. 8. As per the scheme of the goods and services tax regime, incidence of tax is the place of supply. However, Section 13(8) of the IGST Act provides for the exception for the same. Clause (b) of Sub-Section 8 of Section 13 provides that, in the case of intermedi....
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....o their holding company, as all these activities are directed at the vendors. They also noted that it is not necessary that a commission payment is always involved in an intermediary scenario. Similarly, in the case of Global Reach Education, the West Bengal Advance Ruling Authority was considering a case where Global Reach promoted courses of Foreign Universities in India, found suitable prospective students, and assisted in recruitment for which a consideration was paid as a percentage of fees paid by admitted students (commission-based). No fixed retainer or no consideration payable if no student is enrolled. The agreement referred to Global Reach as "Education Agent" with responsibilities including promotion, finding students, and recruitment. The West Bengal State Advance Ruling Authority held that in that case, the Appellant Global Reach promoted courses of Foreign Universities in India, found suitable prospective students, and assisted in recruitment. Consideration was paid as a percentage of fees paid by admitted students (commission-based). No fixed retainer or no consideration payable if no student is enrolled. The agreement referred to Global Reach as "Education Agent....
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.... recipient. Recipient was free to choose suppliers; petitioner's recommendations were not binding on Columbia USA. In that case, the assessing authority also held that the place of supply is India as the supplier was treated as an intermediary as per the definition under Section 2(13) of the IGST Act. 10. The matter came before the Hon'ble High Court of Karnataka, and as per their judgment dated 26.04.2025, the Hon'ble High Court of Karnataka held that: "12. In the light of the principles that emerge from the aforesaid Judgments, Circulars, Notifications etc., in the facts and circumstances obtaining in the instant cases as set out supra analysing the said agreements, I am of the considered opinion that the petitioner is not an 'intermediary' under Section 2(13) of the IGST Act and provisions of the Finance Act, 1994 and the services provided by the petitioner to its service recipients are that of an independent service provider which qualify as export of services under the service tax provisions and 2(6) of the IGST Act for the following reasons: (i) There are only two persons in the subject agreements; (ii) The petitioner renders services on its own ....
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....ollars, and had no authority to represent or bind Blackberry Singapore. Blackberry India filed refund claims for unutilized CENVAT Credit amounting to Rs. 8,55,34,345/- for periods April-June 2012, April-June 2013, and July-September 2013. Department rejected claims on the grounds that Blackberry India was an "intermediary" under Rule 2(f) of POPS Rules, 2012. CESTAT allowed Blackberry India's appeal. CESTAT held it to be an export. Revenue appealed to the Delhi High Court. After considering the facts of the case, the Delhi High Court ruled as follows: "19. The learned CESTAT had examined the Agreement and had concluded as under: 30. It would therefore transpire from the Agreement that: (i) The appellant is engaged in providing marketing, administrative and support service to Blackberry Singapore, as an independent contractor; (ii) The appellant is not an agent or broker of Blackberry Singapore. There is no relationship of principal and agent between Blackberry Singapore and the appellant. The arrangement between the appellant and Blackberry Singapore is on a principal-to-principal basis. Further, the appellant does not have any authority to r....
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....located abroad, and by company located abroad to a sister company located in India has been treated differently by the Revenue. The Revenue in all these cases has treated any services provided by the India Company to its counterpart outside India as intermediary service and not export of services and therefore, levied GST, holding India to be the place of supply. At the same breath, the Revenue has treated any services provided by the foreign company to an Indian Company as import of services and not intermediary services and levied GST on it, holding the place of supply to be in India. We are of the opinion that both the views cannot be taken. One view is to be taken. 15. If there is a contradiction between the findings and rulings passed by the High Court Judicature and Advance Ruling Authority, then ruling of the High court has to be preferred in view of Article 228 of the Constitution of India. However, such recognition of a Ruling of the Advance Ruling Authority is not available especially in view of Section 103 (1)(a) of the CGST Act, which provides that an advance ruling pronounced by the Authority or the Appellate authority shall be binding only on the applicant and conc....
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.... 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 in succeeding paragraphs. 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 "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 Place of Provision of Services Rules, 2012 issued vide notification No. 28/2012-ST, dated 20-....
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....pression "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 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 servic....
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....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' outsources the task of design and development of a particular module of the software to 'C', for which "C' may have to interact with 'B', to know their specific requirements. In this case, 'C' is providing main supply of service of design and development of software to 'A', and thus, 'C' is not an intermediary in this case. Illustration 3 An insurance company 'P', located outside India, requires to process insurance claims of its clients in respect of the insurance service being provided by 'P' to the clients. For processing insurance claims, 'P' decides to outsource this work to some other firm. For this purpose, he approaches 'Q', located in India, for arranging insurance claims processing service from other service providers in India. 'Q' contacts 'R', who is in business of providing such insurance claims processing service, and arranges supply of insurance claims ....
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....ion on the factual aspect than the judgment rendered by the Hon'ble Karnataka High Court in the case of Columbia Sportswear (Supra) appears to be different. Factually the case before us is different from the case before the Karnataka High Court. But at this point, we come to the conclusion that the first consideration of a minimum of three parties is satisfied in this case. 20. Coming to the second requirement of two distinct supplies in case of provision of intermediary services, i.e. (1) Main supply, between the two principals, which can be a supply of goods or services, (2) Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. In this present case, it is submitted that there are two distinct supplies, (i) main supply of the goods or services between the supplier and the Appellant and (ii) ancillary supply of services in the nature of facilitating or arranging the above main supply by Dow Europe between the Appellant and the supplier. 21. In this context, we are of the considered of the opinion that the second consideration is not satisfied because of the fact that both the Dow Eur....