Case Law Details
McDonalds India Pvt Ltd Vs Additional Commissioner, CGST Appeals – II, Delhi & Anr. (Delhi High Court)
Delhi High Court, in the case of M/s McDonalds India Pvt Ltd. v. Additional Commissioner, CGST Appeals – II, Delhi & Anr. [W.P.C No. 11430 of 2022 dated May 18, 2023], has overturned the order that denied the refund of tax paid on inputs. The court based its decision on the fact that the taxpayer was providing services to its holding company, rather than acting as a mediator between the holding company and franchisees in India, as alleged. The court held that the Appellate Authority could not raise additional grounds to reject the taxpayer’s claim for refund on its own initiative in an appeal filed by the taxpayer.
Facts:
M/s. McDonald’s India Pvt. Ltd. (“the Petitioner”) is a subsidiary of McDonald’s Corporation, USA (“the foreign counterpart”). The Petitioner and foreign counterpart entered into 2 agreements namely, Master License Agreement (“MLA”) and Service Agreement. As per MLA the petitioner has non-exclusive rights to certain intellectual property of the foreign counterpart including the right to sub-license and by exercising such right the Petitioner had entered into franchisee agreements with various parties in India.
As per Service Agreement, the Petitioner is bound to perform the certain activities viz, conduct research on subjects including consumer attitudes, demographics, marketing and advertising strategy, investigate the timing and location of Restaurant openings and other strategic matters etc.
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