2024-VIL-175-MAD
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SGST High Court Cases

GST - Section 2(6) & 16(3) of the IGST Act, 2017 – Export of services – Manner of Receipt in Foreign Exchange - Receipt of payment through an intermediary - Refund of input tax credit on Zero-rated supply under Section 54 of the CGST Act read with Rule 89(2) of the CGST Rules, 2017 - Denial of refund on the ground that the petitioner did not submit export invoices in violation of Section 2(6) of the IGST Act, 2017 – HELD - There is no dispute that the petitioner is providing online services of its clients through its online portal. The payments for the services provided by the petitioner are routed through an intermediary namely Paypal with whom the petitioner has an arrangement - As an intermediary, Paypal directly credits the amounts received in Indian currency directly into the petitioner's account. As far as export proceeds, the amounts are received in convertible foreign exchange by the said intermediary, Paypal. The amounts are first credited into its account with CITI Bank of Paypal. Thereafter, amounts in Indian currency are transferred from the intermediaries CITI Bank account to the petitioner's account with HDFC Bank after deduction of its service charges - The routing of payment by the intermediary from its account in CITI Bank to the petitioner's own account in Indian Rupees is in accordance with the provisions of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 - if payments are routed through an intermediary to person like petitioner, the intermediary should be an authorised person to receive such payment in convertible foreign exchange. As an intermediary, the petitioner is required to only credit the amounts in convertible foreign exchange into RBI - Merely because the receipts are routed through the intermediary and received in Indian currency ipso facto would not mean that the petitioner has not exported services within the meaning of Section 2(6) of the IGST Act, 2017 - Receipt of payment by an intermediary for and on behalf of its client will qualify as payment received by the client - Reference to Circular No.88/07/2019-GST dated 01.02.2019 to concluded that the petitioner has not realized the amount in freely convertible foreign exchange therefore cannot be countenanced - petitioner is entitled for export of tax paid on export and the unutilized input tax credit used in export of service - the impugned order is set aside and the writ petition is allowed
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