Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.V. Gangapurwala, M.G. Sewlikar, JJ.
Jar Productions Private Limited – Appellant
Versus
The Union of India & Ors. – Respondents
Writ Petition No. 1143 of 2021
Decided On : 09-06-2022
GST - Export Services - Section 2(6) of Integrated Goods And Services Tax Act - Section 54 of the Central Goods and Services Tax Act - Section 16 of the Integrated Goods and Services Tax Act, 2017 - Section 54(8)(e) of the CGST Act - [KEYWORD] - Export Services - Section 2(6), Section 54, Section 16, Section 54(8)(e)
Fact of the Case:
The petitioner, a company incorporated under the Company's Act, 2013, provided production services to a company located in the U.K. The petitioner filed refund claims for GST, which were rejected on the ground of unjust enrichment as the tax incidence was deemed to have been passed on to the client.
Finding of the Court:
The court found that the services rendered by the petitioner fell within the expression 'export of services' as per Section 2(6) of Integrated Goods And Services Tax Act. It also noted the provisions of Section 54 and Section 16 of the CGST Act, which allow refund in cases of zero rated supply. The court held that if the incidence of tax had not been passed on to the recipient, the petitioner was entitled to the refund.
Issues: The main issue was whether the petitioner was entitled to a refund of GST for export services, considering the principle of unjust enrichment and the passing on of the tax incidence to the recipient.
Ratio Decidendi: The court relied on the legal provisions defining export services and refund eligibility under the GST laws. It emphasized that if the tax incidence had not been passed on to the recipient, the petitioner was entitled to the refund, as per Section 54(8)(e) of the CGST Act.
Final Decision: The court set aside the orders rejecting the refund claims, stating that the petitioner was entitled to the refund of GST for the export services provided.
JUDGMENT
M.G. Sewlikar, J. - Rule. Rule made returnable forthwith. With the consent of parties taken up for final hearing at the stage of admission.
2. This writ petition is preferred against the order of the learned Additional Commissioner dated 19th February 2021 and against the order dated 23rd February 2021 passed by the learned Additional Commissioner whereby the claims of the GST preferred by the petitioner have been rejected.
3. Facts leading to this application can be stated in short as under:-
The petitioner is a Company incorporated under the Company's Act, 2013. The petitioner is engaged in providing production services to 'A Suitable Company Ltd ' located in London United Kingdom (U.K.) (ASCL for short). For the purpose for providing the said services, the petitioner has entered into an agreement dated 12th September, 2019 with ASCL effective from 28th March, 2018. It is further alleged that Clause 4.10 of the agreement provides that if any refund of tax component is received by the petitioner, such amount shall be reduced from the production expenses i.e. while computing the consideration towards production services, the said amount of tax component received as refund will be deducted from the production expenses.
4. For providing the production services to ASCL, the petitioner received and utilised various inputs/ input services on which appropriate CGST/MGST/IGST services were paid as charged by the vendors. In cases, where the services were received from service provider/ vendor located outside India, CGST+MGST or IGST on such supplies was paid by the petitioner.
5. The petitioner filed its first refund application for the period from April to July, 2019 on 31st March, 2020. The said claim was allowed by the respondent no 4 The Assistant Commissioner.
6. The Petitioner filed another refund claim of Rs. 1,43,56,999/-for the subsequent period of August 2019 to October, 2019. Thereafter, the Petitioner received a show cause notice (SCN for short). The petitioner replied to the said notice. After hearing the petitioner, the respondent no 4 rejected the claim of the petitioner on the ground that the incidence of tax has been passed on to the client i.e. ASCL resulting into unjust enrichment of the petitioner. Having held so, respondent no 4 rejected the claim of the refund of the GST. This order was passed on 27th July 2020.
7. Being aggrieved by this order, the petitioner preferred an Appeal to Respondent No 3. After hearing the Petitioner, Respondent No.3 dismissed the Appeal of the Petitioner vide Order-in-Appeal no APK/GST/A-III/ADC/MUM/54/2021 dated 19/02/2021 holding that the incidence of tax has passed on to the client i.e. ASCL and that it amounted to unjust enrichment. The Appellate Authority held that the burden of the GST has been shifted to the service recipient, the petitioner cannot be a beneficiary, as any refund to the petitioner would amount to unjust enrichment. The Appellate Authority placed reliance on the Constitution Bench judgment of the Supreme Court in the case of Mafatlal Industries vs Union of India (1997) 5 SCC 536.
8. It is further alleged that the petitioner filed GST claim of Rs. 5,79,25,012/- for the period from November, 2019 to July 2020 on 1st September 2020. On 21st September, 2020, respondent no 4 issued SCN to the petitioner. Identical objections as raised in SCN dated 27th July, 2020, were also raised in the SCN dated 21st September, 2020. The Petitioner replied to this notice. After hearing the Petitioner, Respondent No. 4 rejected the claim of refund of the GST on the same ground that the incidence of tax had been passed on to the recipient of the services and if refund was allowed, it would amount to unjust enrichment. This order was passed by respondent no 4 on 16th October 2020.
9. Being aggrieved by the order of Respondent No. 4, the Petitioner preferred Appeal to Respondent No.3. Respondent No. 3 gave personal hearing to the Petitioner and confirmed the order of Respondent No. 4.
The main legal point established in the judgment is that for export services, if the tax incidence has not been passed on to the recipient, the service provider is entitled to a refund of GST, as per....
The services provided were not intermediary services but on a principal-to-principal basis, justifying the refund of unutilized input tax credit as the denial was arbitrary and without jurisdiction.
The court emphasized that for services to qualify as 'export of services', authorities must accurately ascertain the petitioner's role as an intermediary, citing inadequate findings in previous rulin....
The main legal point established in the judgment is that the petitioner's services did not qualify as 'Intermediary Services' and that the place of supply of services was not in India as per the rele....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
