2023 (5) TMI 927 - HC - GST

Refund of ITC - Denial on the ground that the petitioner was merely facilitating and arranging services and thus, qualified as an intermediary within the meaning of Section 2(13) of the Integrated Goods and Services Tax Act, 2017 - zero rated supply - place of supply - HELD THAT - Although the Adjudicating Authority has interpreted the Agreement, we find that there is insufficient analysis of the actual work performed by the petitioner. There is no material to relate the remuneration to the sales figure on empirical basis. The Adjudicating Authority has merely referred to a portion of Clause 2.4 of the Agreement, which provides that Netgear Technologies (India) Pvt. Ltd. would perform reconciliation of that year s sale, as a direct result of the service provider s activity and would reasonably approve the cost incurred by the service provider in fulfilling its duties under the Agreement. The same does not, absent any other material, indicate that the remuneration is based on the sales achieved. The question whether an entity is an intermediary will have to be determined on the basis of actual work performed. It is deemed apposite to set aside the impugned order as well as the Order-in-Original dated 10.01.2020 and remand the matter to the Adjudicating Authority to decide afresh after examining the actual work performed by the petitioner. It would be open for the Adjudicating Authority to call for any information that it considers relevant for the said purpose including, invoices raised by the petitioner, as well as the reconciliation statement of the sales as referred in the Order-in-Original. Petition disposed off.

Summary

Issues involved:
The petitioner challenges an Order-in-Appeal rejecting their appeal for refund of Input Tax Credit (ITC) on the ground of being classified as an intermediary under the Integrated Goods and Services Tax Act, 2017.

Summary:
1. The petitioner, engaged in exporting services, sought refund of ITC for zero-rated supplies to Netgear Pte. Ltd. The Adjudicating Authority rejected the claim, deeming the petitioner as an intermediary facilitating services, not an independent supplier.
2. The petitioner contended that they provided marketing and sales support services independently, based on a cost-plus Agreement with Netgear Pte. Ltd. The Adjudicating Authority, however, considered the petitioner as procuring orders for Netgear, concluding that the fee paid was linked to sales made in India.
3. The petitioner argued that the fee structure in the Agreement was misunderstood, emphasizing it was on a cost-plus basis. The Court noted the lack of detailed analysis on the petitioner's actual work and remuneration basis, directing the Adjudicating Authority to reevaluate after examining the work performed.
4. The Court set aside the impugned order and remanded the matter for fresh consideration, instructing the Adjudicating Authority to review the actual work done by the petitioner and relevant documents, considering previous judgments and the need for empirical evidence in determining intermediary status.