The Hon’ble Delhi High Court in M/s. Cube Highways and Transportation Assets Advisor Private Limited v. Assistant Commissioner CGST Division & Ors. [W.P.(C) 14427 of 2022 dated August 17, 2023] held that, the advisory services were treated as ‘export of services’ under service tax and the assessee was not treated as ‘Intermediary’ under the Finance Act, 1994 (“the Finance Act”) and since, the definition of ‘Intermediary’ is similar to the definition under Sub-section (13) of Section 2 of the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) therefore the advisory services to be treated as export of service.
Facts:
M/s. Cube Highways and Transportation Assets Advisor Pvt. Ltd. (“the Petitioner”) is an entity of a global group company which is engaged in the business of rendering investment advisory services to non-resident group companies, which are engaged in the transportation sector.
The Petitioner entered into a Support Service Agreement dated June 06, 2015 (“the Agreement”) with one of its group company (“the service recipient”) which is located in Singapore whereby the Petitioner agreed to provide advisory support services and the parties agreed that the Petitioner will be remunerated at an arm’s length price to be determined on cost-plus markup basis.
The services rendered by the Petitioner were accepted as ‘export of services’ by the Revenue under the Finance Act and the Input Tax Credit (“ITC”) was refunded to the Petitioner as claimed.
In GST regime, the Petitioner filed the refund application on July 13, 2020 seeking refund of unutilized ITC on export of services relating to the tax period April 2018 to March 2019 under Section 54 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
The Revenue Department (“the Respondent”) issued a show cause notice on July 18, 2020 (“the SCN”) proposing to reject the Petitioner’s claim being Place of supply is in India.
The Petitioner vide reply dated September 02, 2021 contended that the Company is providing Management Consultancy services to entities located outside India, the place of supply is outside India. Thus, the Petitioner is eligible for refund.
However, the Adjudicating Authority by an order dated August 15, 2020 (“the Order”) rejected the Petitioner’s claim for refund by on the sole ground that the place of supply of services was in India and therefore, the services rendered could not be considered as export of services.
Aggrieved by the Order, the Petitioner filed an appeal under Section 107 of the CGST Act who vide order dated March 29, 2022 (“the Impugned Order”) upheld the decision of the Adjudicating Authority.
Aggrieved by the Impugned Order the Petitioner filed writ before the Hon’ble Delhi High Court for refund of unutilized ITC for the financial years 2018-19 to 2020- 21.
Issue:
Whether Investment Advisory services rendered by the Indian Company to the overseas service recipient qualifies as export of service?
Held:
The Hon’ble Delhi High Court in W.P.(C) 14427 of 2022 held as under:
- Observed that, neither the Adjudicating Authority nor the Appellate Authority had any material to doubt the Petitioner has rendered advisory services to the overseas recipient.
- Noted that, the Petitioner is the service provider and is rendering the advisory services directly to service recipient and is not acting as a facilitator for providing such services.
- Noted that, the investment advisory Services were treated as ‘export of services’ for the purpose of levy of service tax under the Finance Act and the definition of ‘Intermediary’ under Rule 2(f) of the Place of Provision of Service Rules, 2012 is similar to the definition of ‘Intermediary’ under Sub-section (13) of Section 2 of the IGST Act.
- Held that, the impugned order is not sustainable on the aforesaid grounds.
- Set aside the Impugned Order and remanded back the matter to the Adjudicating Authority.
- Directed, the Adjudicating Authority to process the Petitioner’s claim for refund as expeditiously as possible and preferably with in a period of eight weeks.
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