Vodafone Idea Ltd Vs Union of India And 3 Others (Allahabad High Court)
The Allahabad High Court addressed multiple writ petitions filed by Vodafone Idea Ltd. challenging a common appellate order dated March 2, 2023, passed by the appellate authority under Section 107(11) of the Central Goods and Services Tax (CGST) Act, 2017.
Issues with the Appellate Order
Upon reviewing the impugned order, the High Court identified two main deficiencies:
1. The appellate authority did not properly appreciate the Supreme Court’s judgments concerning the condonation of delay.
2. After holding that the matter was time-barred, the appellate authority nonetheless proceeded to decide the issue on merits. The decision on merits was deemed to be without any basis in law as it failed to consider relevant judgments from the Bombay and Delhi High Courts.
Reliance on Bombay High Court Precedent
The Allahabad High Court primarily relied on the specific findings of the Bombay High Court in the case of Vodafone Idea Limited v. Commissioner of CGST and Central Excise, Mumbai. Key findings from the Bombay High Court judgment that were emphasized included:
- Recipient of Service: As per Section 2(93)(a) of the CGST Act, the “recipient” of service is the person liable to pay the consideration. The Bombay High Court found that Vodafone Idea Ltd. was contractually obligated only to Foreign Telecom Operators (FTOs), and the consideration was payable by the FTOs in convertible foreign exchange. The court determined that the FTO, and not the FTO’s subscriber (individual), was the recipient of the service. The concept that the “customer’s customer cannot be your customer” was agreed upon.
- Place of Supply: The court addressed whether Section 13(2) or Section 13(3) of the Integrated Goods and Services Tax (IGST) Act applied. It held that Section 13(3)(b), which concerns “service supplied to an individual,” was not applicable because the services were supplied to the FTO, not to an individual subscriber.
- Export of Service: The Bombay High Court accepted the view that the service rendered to the FTO constituted an export of service under previous law (Export of Service Rules, 2005), as the service recipient (FTO) was located outside India and the benefit accrued to the FTO, who could then bill their own subscriber.
The Allahabad High Court noted that the Bombay High Court’s judgment was not appealed before the Supreme Court, and the Central Board of Indirect Taxes and Customs (CBIC) decided not to file a Special Leave Petition (SLP) against it. Consequently, the Bombay High Court’s decision “holds the field.”
