2023 (4) TMI 425 - HC - GST

Refund of IGST - Export of services - intermediary - providing Market Research Services - Place of supply - whether denial of refund of integrated tax is justified on the ground that the petitioner is an intermediary? - HELD THAT - It is apparent that the impugned order passed by the appellate authority is without application of mind. The appellate authority has failed to notice that the petitioner s appeal was confined only for refund of integrated tax paid on invoices raised in respect of Market Research Services. The order passed by the adjudicating authority was premised on the basis that the petitioner was rendering services directly to the customers of OHMI, Japan. This was in the context of the Business Support Services rendered by the petitioner to OHMI, Japan. 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 allegation that it had arranged supply of such services from a third party - Admittedly, in the present case, the petitioner is rendering the Market Research Services directly to OHMI, Japan. Therefore, insofar as providing Market Research Services is concerned, the petitioner cannot be held to be an intermediary. Petition allowed.

Summary

Issues involved:
The judgment involves the denial of integrated tax refund based on the classification of the petitioner as an intermediary, and the failure of the appellate authority to consider the specific claim for refund related to Market Research Services.

Denial of integrated tax refund - Intermediary classification:
The petitioner, an Indian company, sought a refund of integrated tax on zero-rated supply provided to OHMI Industries Ltd., Japan. The Adjudicating Authority rejected the refund application, deeming the petitioner as an intermediary due to providing support directly to OHMI's customers. However, the petitioner contended that it rendered Market Research Services independently and not as an intermediary. The Court noted that the petitioner's appeal was solely for the refund related to Market Research Services, which the appellate authority failed to acknowledge. The Court emphasized that the petitioner's activities did not align with the definition of an intermediary under the IGST Act, as the petitioner provided services directly to OHMI, Japan without arranging or facilitating supplies from a third party.

Court's reasoning and conclusion:
The Court analyzed the scope of work under the Market Research Services Agreement and found that the petitioner's activities did not facilitate the supply of services between OHMI, Japan, and its customers in India. Referring to the definition of an intermediary under the IGST Act, the Court highlighted that the petitioner, by providing Market Research Services on its own account, did not meet the criteria of an intermediary. Additionally, the Court cited a relevant Circular that clarified the concept of intermediary services requiring a minimum of three parties, which was not applicable in the petitioner's case. Relying on a previous decision, the Court allowed the petition, set aside the impugned order, and directed the respondent to process the petitioner's claim for the refund of integrated tax related to Market Research Services, along with applicable interest.

This summary provides a detailed overview of the judgment, highlighting the key issues, the Court's analysis, and the final decision rendered in favor of the petitioner.