Grant of IGST reimbursement for telecom services provided to FTOs
Fact and issue of the case
The petitioner has filed the present petition impugning a common order dated 31.08.2022 passed by the Appellate Authority (respondent 2) dismissing the appeals (four in number) preferred by the petitioner under Section 107 of the Central Goods and Services Tax Act, 2017 (hereafter CGST Act’) against orders passed by the Adjudicating Authority.
The petitioner is, essentially, aggrieved by rejection of its claims for refund of Integrated Goods and Service Tax (hereafter ‘IGST’) in respect of telecommunication services rendered by the petitioner pursuant to agreements with Foreign Telecom Operators (FTOs).
The Adjudicating Authorities as well as the Appellate Authority rejected the refund claims on, essentially, two grounds. First, that the services provided by the petitioner in respect of which refund of IGST was claimed did not as qualify export of services. And second, that the claims preferred were beyond the period of two years from the relevant dates and therefore, were barred by limitation.
According to the petitioner, the connectivity services rendered by it to inbound subscribers of FTOs qualifies as export of services as the services are rendered to an entity resident outside India- FTOs. The petitioner also claims that its claims for refund were within the prescribed period as the petitioner had received payments after the date of invoices and its claims were made within a period of two years of receipt of remittances for the services in question.
The principal questions involved in the present petition are whether the telecom services provided by the petitioner to inbound subscribers of FTOs constitute export of services and whether its claims were within the period of limitation as specified under Section 54(1) of the CGST Act.
Observation of the court
It is apparent that the provisions for ascertaining the place of supply of services under Rule 6A of the ST Rules are similar to Section 2(6) of the IGST Act inasmuch as the services will be treated as export of services when (a) the provider of service is located in the taxable territory, (b) the recipient of the service is located outside India, and (d) the place of provision of the service is outside India. There is no cavil that the decisions rendered on the question of export of services in the context of Rule 3 of the Export of Services Rules, 2005 are also applicable to the controversy in question.
It is also not disputed that the Customs Excise and Service Tax Appellate Tribunal has in several cases following the aforesaid decision, allowed the appeals preferred by the petitioner and directed the refund. The predecessor of the petitioner (Vodafone India Ltd.) had prevailed before the learned Customs Excise and Service Tax Appellate Tribunal on the question whether the services in question qualified for export services [Final Order No. A/ 1381-1385/201 4-WZB/C-I(CSTB) dated 21.08.2014]. The Revenue has filed an appeal before the Supreme Court [Civil Appeal Diary No.38259/2014), which was admitted by the Supreme Court by an order dated 02.12.2014. However, the direction to grant refund was not stayed. The learned counsel for the petitioner also informed this court that in some cases, the Revenue has refunded the amount claimed by the petitioner.
In view of the above, the present petition is allowed and the respondents are directed to refund the amounts as claimed by the petitioner. The pending applications are also disposed of.
Read the full order from hereVodafone-Idea-Limited-Vs-Union-of-India-Ors.-Delhi-High-Court2