Xilinx India Technology Services Pvt Ltd Vs Special Commissioner Zone Viii & Anr. (Delhi High Court)
In a landmark judgment, the Delhi High Court ruled in favor of Xilinx India Technology Services Pvt Ltd, directing the Special Commissioner, Zone VIII, and others to process the refund claim of ₹1.83 Crores under the Integrated Goods & Service Tax (IGST) Act, 2017. This judgment addresses significant issues related to the export of services by Indian subsidiaries of foreign companies and the interpretation of related provisions under the IGST Act.
Background and Context
Xilinx India, a subsidiary of Xilinx Inc., USA, is an Export Oriented Unit (EOU) engaged in exporting information technology software services. It entered into an Intercompany Service Agreement with its holding company for the provision of these services, remunerated on a cost-plus 15% basis. The controversy began when the petitioner’s refund application for IGST was rejected on the grounds that the services did not qualify as exports under Section 2(6) of the IGST Act.
Legal Framework
The crux of the dispute revolved around Section 2(6) of the IGST Act, which defines “export of services.” The respondents argued that the petitioner and its holding company were not distinct entities but merely establishments of the same person, as per Explanation 1 to Section 8 of the IGST Act. This would imply that the services provided did not qualify as exports, thus invalidating the refund claim.
