2023-VIL-319-DEL

SGST High Court Cases

GST - Section 16, Section 13(3)(b) and Section 13(5) of IGST Act, 2017 – Zero-rated Supply - Export of service or Intermediary Service – petitioner entered into a service agreement with its holding company whereby the petitioner had agreed to perform certain services for its holding company - petitioner filed refund application for refund of tax paid on the inputs used for the services rendered to its holding company under the Service Agreement – vide the impugned order Adjudicating Authority rejected the refund of input tax credit holding that the services rendered by the petitioner could not be considered as export of services as the services rendered were in the nature of intermediary services and therefore, the place of supply of the said service was in India - whether the petitioner is an intermediary within the meaning of Section 2(13) of the IGST Act in respect of services rendered under the Service Agreement – HELD – the scope of services as mentioned in the Service Agreement, read in isolation, do not entail procurement or facilitating services from third-party suppliers - Rendering service on behalf of another person does not render the service provider an intermediary - Appellate Authority has held that the petitioner was acting as a mediator between prospective joint ventures and franchisees, where the main supplies were made by McDonald’s USA and ancillary supplies were provided by the petitioner – there is no basis for the Appellate Authority to have concluded that the petitioner acts as a mediator between joint ventures/ franchisees and McDonald’s USA - The Appellate Authority has not considered that the MLA, which entitles the petitioner to enter into sub-licenses with franchisees, is a separate agreement – when place of services supplied by the petitioner was not the subject matter of SCN, no such additional grounds for rejecting the petitioner’s claim for refund could be raised suo motu by Appellate Authority, in an appeal preferred by the petitioner - under the Service Agreement, the service recipient is McDonald’s USA and the petitioner is the service provider. The supply of services by the petitioner to McDonald’s USA does not require the physical presence of McDonald’s USA – Section 13(3)(b) of the IGST Act contemplates the location of service, whereby the presence of a service recipient is necessarily to be in India - Conducting interviews, making reference checks or performing any screening services in connection with potential joint venture partners, franchisees or employees has no connection with the services as contemplated under Section 13(5) of the IGST Act – the impugned order as well as the order passed by the Adjudicating Authority are set aside – matter remanded to the Adjudicating Authority to consider the petitioner’s case afresh – the writ petition is disposed of

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