Magna Automotive India Vs Union of India & Ors. (Bombay High Court)
The petitions, including that of Magna Automotive India, presented issues previously addressed in M/s. Sundyne Pumps and Compressors India Pvt. Ltd. vs. The Union of India (Writ Petition No. 15228 of 2023), decided on June 16, 2025. Counsel for the petitioners, Mr. Bharat Raichandani, argued that the Sundyne Pumps decision fully covered the matters at hand, seeking similar relief. The opposing counsel confirmed that the issues were indeed covered by the Sundyne Pumps precedent, while also indicating that the department was considering an appeal to the Supreme Court. Despite the potential appeal, the High Court proceeded to grant the petitioners relief by making the rule absolute in terms of the prayer clauses, following the established precedent.
Please note The Bombay High Court in Sundyne Pumps and Compressors India Pvt. Ltd. vs. The Union of India held that an Indian subsidiary providing services to its foreign holding company does not automatically qualify as an “agent” under the CGST Act. The Court ruled that to satisfy the definition of an agent under Section 2(5) of the CGST Act, the agent must supply goods or services on behalf of the principal. Merely being a subsidiary with fixed consideration and mark-up does not establish an agency relationship. The petitioner, which had filed refund applications for unutilized input tax credit (ITC) on zero-rated supplies under Section 54(3) of the CGST and MGST Acts, was denied refunds by the tax authorities on the ground that the foreign recipient was carrying on business in India through the petitioner as its “mere establishment of distinct person.” The Court rejected this reasoning, holding that the petitioner provided services as an independent contractor on a principal-to-principal basis and was not carrying out business on behalf of the foreign entity. Referring to earlier judicial precedents and CBIC circulars clarifying that supplies to related parties can still qualify as exports, the Court concluded that the petitioner is entitled to a refund of unutilized ITC along with statutory interest under Section 56 of the CGST Act, to be processed within four weeks.
