Globolive 3D Private Limited Vs Union of India (Bombay High Court)
Introduction: The Bombay High Court recently delved into a significant issue concerning the nature of Satellite derived 3D model services. The core matter revolved around whether such services should be categorized as Online Information Database Access or Retrieval (OIDAR) services or considered as an export of services under the IGST Act.
Background: Globolive 3D Private Limited approached the Bombay High Court challenging an order from the appellate authority. This order had declined their refund application for the tax they had previously paid.
Key Question: The principal question was whether the services provided by Globolive 3D – specifically, Satellite derived 3D model services – fall within the “export of services” as described under Section 2(6) of the IGST Act or are they to be classified as OIDAR as per Section 2(17) of the IGST Act.
Detailed Analysis:
1. Nature of the Agreement: The agreement with M/s Emirates Defence Industries Co. PJSC revealed that Globolive 3D was engaged in delivering Satellite derived 3D model services. The services were to be offered to “EDIC and any of its Affiliates” as appointed by Emirates Defence Industries Co. PJSC.
2. Location of Service Provision: The service was distinctly for M/s. Emirates Defence Industries Co., which isn’t based in India. The place of the service supply was agreed to be outside India. Moreover, the payment for these services was received by Globolive 3D in convertible foreign exchange.
3. OIDAR Definition: The court pondered upon how such specialized services could be equated to OIDAR, as defined under Section 2(17) of the IGST Act. While the services were transferred electronically, the court noted that this alone doesn’t categorize them as OIDAR.
4. The Agreement’s Interpretation: If the interpretation favored by the respondents was accepted, any service or information communicated through electronic means could be misconstrued as OIDAR, which deviates from its intended definition.
5. Nature of Work: The specialized task was the creation of 3D city models of specific locations like Abudhabi. Such work isn’t freely available on the internet nor does it fit the type of material OIDAR would typically entail.
6. Consideration for Services: The petitioner received payment in convertible foreign exchange for the services rendered, reinforcing their stance as exporters of service.
7. Appellate Authority’s Decision: The appellate authority’s understanding and interpretation of the agreement were called into question. The court believed that the authority had misconstrued the intent and essence of the agreement.
Conclusion: In light of the presented analysis, the Bombay High Court leaned in favor of Globolive 3D, emphasizing that their services should not be categorized as OIDAR. The court stressed the importance of understanding the substance of an agreement rather than its form, ultimately upholding Globolive 3D’s contention regarding the export of services.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule, made returnable forthwith. Respondents waive service. By consent of the parties, heard finally.
2. This is a petition under Articles 226 and 227 of the Constitution of India whereby in the absence of an appellate tribunal being constituted, the petitioner is before the Court praying for setting aside an order dated 31 March, 2021 passed by the appellate authority, being an order passed by the Joint Commissioner, CGST and Central Excise Appeal-I, Mumbai, by which the respondent’s/department’s appeal, against granting of the petitioner’s refund application has been allowed, consequence being, declining of the refund of the tax paid by the petitioner.
3. The question which falls for determination is as to whether the services rendered by the petitioner of providing Satellite derived 3D model services, would fall within the purview of “export of services” as defined under Section 2(6) of the IGST Act or would be categorized as Online Information Database Access or Retrieval services as defined under Section 2(17) of the IGST Act, in the context of Section 13 of the IGST Act.
4. The relevant facts as averred in the petition are:- The petitioner is a company incorporated under the Companies Act, 1956. The petitioner entered into a Service Agreement dated 09 September, 2019 with M/s. Emirates Defence Industries Co. PJSC, which was inter-alia in regard to providing of service of production of 3D city models of three cities being Abudhabi, AL Ain, AL Dhafra as per the specifications provided by M/s. Emirates Defence Industries Co. PJSC. The relevant clauses of the service agreement entered between M/s. Emirates Defence Industries Co. PJSC and the petitioner are as under:-
“1. SCOPE OF SERVICES:
The Scope of services performed by Consultant shall include the following:-
* Supply of Satellite derived 3D City model of Abu Dhabi Emirate with following specifications.
Using photogrammetric workstations, our team automatically or semi-automatically converts Aerial flight and Satellite stereo imagery into groups of polygons accurately configured and presented as 3D city models. Using stereo paris of these images, relevant roof points are measured and coded. The walls result by intersecting the roof polygons with the Digital Terrain Model (DTM) and back projecting to the roof. This ensures the new 3D data is consistent with the existing 2D data. Quality management and editing is then prior exporting to a host of software file formats including Collada, Geodatabase, Multipatch shapefile, .dxf. .kml, .fbx. .skp .fbx, & obj.”
2. Delivery Schedule and Deliverables
* The total period for completion of services is 90 days from commencement date which is distributed as follows:
