2022 (11) TMI 743 - HC - GST

Refund claim of un-utilized Input Tax Credit (ITC) - zero rated supplies of services without payment of Integrated Goods and Service Tax - Intermediary Services - export of services or not - place of provision of services. 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 be treated as intermediary services ? HELD THAT - Section 2 (6) of the IGST Act lays down the conditions which need to be fulfilled for qualification of a service as export of services . A conjoint reading of Section 13 (2) and Section 13 (8) clarifies the manner for determining the place of supply of services where location of supplier or location of recipient is outside India. Generally, place 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 54 of the CGST Act prescribes the manner in relation to claiming refund by tax payers, mainly covering the eligibility and prescribed timelines 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. A bare perusal of the recitals and relevant clauses of the MSA do not in any manner indicate that petitioner is acting as an intermediary so as to fall within the scope and ambit of the definition of intermediary under Section 2 (13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a 3rd party to render the main service which has actually been rendered by the petitioner. The impugned order dated 15.02.2021 (Annexure P-18) holding the petitioner to be an intermediary under Section 2 (13) of the IGST Act, cannot sustain - Petition allowed.

Summary

Issues Involved:
1. Whether the petitioner qualifies as an "intermediary" under Section 2(13) of the IGST Act.
2. Whether the services provided by the petitioner qualify as "export of services" under Section 2(6) of the IGST Act.
3. Whether the petitioner is entitled to a refund of unutilized Input Tax Credit (ITC) under Section 54 of the CGST Act.

Issue-Wise
Detailed Analysis:

1. Whether the petitioner qualifies as an "intermediary" under Section 2(13) of the IGST Act:
The primary issue is whether the petitioner, a Business Process Outsourcing (BPO) Service Provider, falls under the definition of "intermediary" as per Section 2(13) of the IGST Act. The court examined the Master Services Sub-Contracting Agreement (MSA) between the petitioner and Genpact International Incorporated (GI). The MSA indicated that the petitioner provides services directly to GI's customers and not as an intermediary. The court emphasized that for a person to qualify as an intermediary, three conditions must be met: a principal-agency relationship, involvement in arranging or facilitating services provided by a third party, and not performing the main service. The court found that the petitioner performs the main service on its own account and does not facilitate services between GI and its customers. Therefore, the petitioner does not qualify as an intermediary.

2. Whether the services provided by the petitioner qualify as "export of services" under Section 2(6) of the IGST Act:
The court analyzed whether the services provided by the petitioner qualify as "export of services" under Section 2(6) of the IGST Act. The court noted that the petitioner provides services from India to customers located outside India, receives payment in convertible foreign exchange, and the place of supply is outside India. The court referenced previous orders and circulars, including a circular dated 20.09.2021, which clarified that sub-contracting arrangements do not constitute "intermediary services." The court concluded that the services provided by the petitioner qualify as "export of services" and are zero-rated supplies under Section 16 of the IGST Act.

3. Whether the petitioner is entitled to a refund of unutilized Input Tax Credit (ITC) under Section 54 of the CGST Act:
The petitioner filed for a refund of unutilized ITC amounting to Rs. 26,34,61,625/- for the period from July 2017 to March 2018. The court examined the relevant statutory provisions, including Section 54 of the CGST Act, which prescribes the manner for claiming refunds. The court found that the petitioner met the conditions for claiming a refund of unutilized ITC for zero-rated supplies. The court referenced an earlier order dated 25.01.2018, which granted a refund to the petitioner under similar circumstances. The court emphasized the principle of consistency in tax proceedings and concluded that the petitioner is entitled to the refund of unutilized ITC.

Conclusion:
The court quashed the impugned order dated 15.02.2021, holding the petitioner as an intermediary, and restored the order in original dated 14.03.2019, granting a refund of Rs. 26,34,61,625/- to the petitioner. The court also directed that the benefit of this order shall apply to subsequent refund claims by the petitioner. The writ petition was allowed in the aforesaid terms.