Case Law Details
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.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. These matters are not on board. However, learned counsel for the parties stated that the issue raised in these Petitions are similar, if not identical to the issue raised in Writ Petition No.14325/2024 which is on board and was disposed of by us today.
3. Therefore, with the consent of learned counsel for the parties even these petitions were taken on board for disposal.
4. Mr. Raichandani, learned counsel for the Petitioner submits that the issues raised in this petition are entirely covered by the decision of this Court in M/s. Sundyne Pumps and Compressors India Pvt. Ltd. vs. The Union of India in Writ Petition No. 15228 of 2023 decided on 16 June 2025 by the co-ordinate Bench of this Court. Accordingly, He submits that the Rule be made absolute in this petition by granting the petitioner the reliefs prayed for.
5. Ms. Vyas, on instructions, fairly states that the issues raised are indeed covered by M/s. Sundyne Pumps and Compressors India Pvt. Ltd. (supra). However, she submits that the department is in process of considering challenging this decision before the Hon’ble Supreme Court.
6. For the present, the decision in M/s. Sundyne Pumps and Compressors India Pvt. Ltd. (supra) holds the plea.
7. Accordingly, by following the decision in M/s. Sundyne Pumps and Compressors India Pvt. Ltd. (supra), we allow these petitions. In all these petitions except in WP No. 6501/2024 Rule is made absolute in terms of prayer clause (a). In WP No. 6501 of 2024 Rule is made absolute in terms of prayer clauses (a) and (b).
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