Verizon Communication India Pvt. Ltd. Vs Assistant Commissioner (Delhi High Court)
The Delhi High Court considered four writ petitions filed by Verizon Communication India Pvt. Ltd. under Article 226 of the Constitution raising a common issue of whether connectivity services provided by the petitioner to MCI International Inc. (Verizon US) for data transfer constituted export of telecommunication services under the Finance Act, 1994 and the relevant rules. Verizon India had entered into a Master Supply Agreement with Verizon US to provide connectivity services, including local access, bandwidth and MPLS VPN, for Verizon US’s global customers. Verizon India held National Long Distance and International Long Distance licences and provided data transfer services without offering voice telephony. It stated that Verizon US was located outside India, received the services, and paid for them in convertible foreign exchange.
The dispute arose after Verizon India filed refund claims for unutilised Cenvat credit for the period January 2011 to September 2014 under Rule 5 of the Cenvat Credit Rules, 2004. The Assistant Commissioner rejected the claims through orders dated 12 September 2016, holding that the services were provided within India and therefore did not qualify as export of services. A subsequent show cause notice dated 11 November 2016 demanded service tax along with interest and penalty on amounts received from Verizon US, alleging that the telecommunication services did not qualify as exports.
