2022 (12) TMI 723 - HC - Service Tax

Refund of unutilized input tax credit - export of services - intermediary services or not - judicial discipline - period of October, 2015 to December, 2016 and January, 2017 to June, 2017 - HELD THAT - A plain reading of the impugned order indicates that the learned Assistant Commissioner rejected the petitioner s claim by questioning the decision of the learned Commissioner (Appeals) to allow the petitioner s appeal and reject the Revenue s appeals. The learned Assistant Commissioner held that the learned Commissioner (Appeals) has erred in following the decision of this Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. 2017 (9) TMI 632 - DELHI HIGH COURT , on the ground that the Special Leave Petition against the said decision is pending before the Supreme Court. The impugned order has been passed in complete disregard of the judicial discipline. It is, ex facie, apparent that the learned Assistant Commissioner has attempted to overreach the orders passed by the superior authority - Since the respondent was seeking to defend the impugned order, this Court had called upon Mr. Raghupathy Ramachandran, Senior Standing Counsel, Central Board of Indirect Taxes and Customs (CBIC), to also file written submissions even though he was not appearing in the present petition. He has fairly submitted that the impugned order, which proceeds on the basis that the petitioner is a provider of intermediary services, is incorrect and it is not open for the Revenue to take this stand. The Revenue would necessarily have to wait for the outcome of the appeals preferred by the learned CESTAT (which have since been dismissed as well). The learned counsel appearing for the respondent fairly states that the impugned order be set aside - Petition allowed.

Summary

Issues Involved:
1. Entitlement to refund of unutilized input tax credit.
2. Classification of services as "intermediary services" versus "export of services."
3. Adherence to judicial discipline by the adjudicating authority.

Detailed Analysis:

1. Entitlement to Refund of Unutilized Input Tax Credit:
The petitioner, Singtel Global India Pvt Ltd., claimed refunds for unutilized input tax credit for three periods: July 2015 to September 2015, October 2015 to December 2016, and January 2017 to June 2017. The Assistant Commissioner initially approved the refund for the first period but denied the refunds for the subsequent periods, asserting that the services rendered fell under "intermediary services" and did not qualify as export of services. The Commissioner (Appeals) overturned these denials, referencing the court's decision in Verizon Communication India Pvt. Ltd. v. Assistant Commissioner Service Tax, which established that the petitioner was not an intermediary but an exporter of services.

2. Classification of Services:
The core issue revolved around whether the petitioner's services were intermediary services or export services. The CESTAT, in a common order, concluded that the petitioner was not an intermediary but engaged in exporting telecommunication services. The agreement between SingTel and SGIPL indicated that SGIPL provided services directly to SingTel and billed them in US dollars, establishing a principal-to-principal relationship. The agreement explicitly stated that the relationship was that of independent contractors, negating any intermediary role.

3. Adherence to Judicial Discipline:
The Assistant Commissioner's refusal to process the refund, despite the Commissioner (Appeals) and CESTAT's orders, was a significant point of contention. The Assistant Commissioner questioned the Commissioner (Appeals)'s reliance on the Verizon case, arguing that the Supreme Court had not yet finalized the matter. However, this was deemed an overreach and a disregard for judicial discipline. The Assistant Commissioner's attempt to re-adjudicate the petitioner's entitlement to the refund was found inappropriate.

Conclusion:
The High Court set aside the impugned order of the Assistant Commissioner, directing the respondent to process the petitioner's refund application within four weeks. The court emphasized the need for adherence to judicial discipline and instructed the respondent to consider the petitioner's entitlement to interest due to the delay in processing the application. The petition was allowed, and all pending applications were disposed of accordingly.