The central legal point established in the judgment is the need to examine the actual work performed by a party to determine its status under the IGST Act.

JUDGMENT

Vibhu Bakhru, J. (Oral)

1. The petitioner has filed the present petition impugning an Order- in-Appeal (Appeal No.433/JC/Central Tax/App-I/Delhi/2019) dated 28.12.2021 ( hereafter `the impugned order'), passed by the Appellate Authority (Joint Commissioner, CGST Appeals-I, Delhi), whereby the petitioner's appeal against an order dated 10.01.2020, passed by the Adjudicating Authority was rejected.

2. The petitioner claims that it is engaged in the business of exporting services to Netgear Pte. Ltd. without payment of Integrated Goods and Services Tax (IGST). The petitioner claims that since the supplies made are zero rated supplies, it is entitled to the refund of Input Tax Credit (ITC). In this context, on 04.08.2020, the petitioner filed an application (ARN AA070820005153S), seeking refund of an amount of

3. The Adjudicating Authority (respondent no.2) issued a show cause notice dated 19.08.2020, inter alia, proposing to reject the petitioner's claim for refund on the ground that the petitioner was merely facilitating and arranging services and thus, qualified as an intermediary within the meaning of Section 2(13) of the Integrated Goods and Services Tax Act, 2017 (hereafter `the IGST Act'). Consequently, the place of supply of services was in India and therefore, the supplies made could not be considered as zero-rated supplies within the meaning of Section 16(1) of the IGST Act.

4. The petitioner responded to the said show cause notice, inter alia, claiming that it is an independent supplier of services. The petitioner claims that during the relevant period, it had provided marketing and sales support services in terms of the Agreement dated 01.01.2010 (hereafter `the Agreement') entered into with Netgear Pte. Ltd, and was remunerated in cost plus basis. The Adjudicating Authority did not accept the said contention. The Adjudicating Authority examined the Agreement and found that the petitioner was engaged in facilitating and promoting supply of goods and services of Netgear Asia; and therefore, was an intermediary. The Adjudicating Authority based its conclusion on Clause 2.2 of the Agreement, Clause 2.2(a) provided that the petitioner would make best effort to promote the sales and licensing of the products in the territory. And, in terms of Clause 2.2(b) of the Agreement, all orders would be subject to scrutiny and acceptance by Netgear in Hong Kong, on the conditions determined by Netgear in its own discretion.

5. The Adjudicating Authority proceeded on the basis that the petitioner was procuring orders for its principal (Netgear Pte. Ltd.). The Adjudicating Authority also rejected the petitioner's contention that the decision of the CESTAT in the case of Lubrizol Advance Materials India Pvt. Ltd. v. CCE, Belapur, 2019 (22) G.S.T.L. 355(Tri.- Mumbai) was applicable on the ground that the remuneration in the present case was not based on cost plus basis. The Adjudicating Authority concluded that the fee paid to the petitioner was relatable to the sales made by them to the customers in India.

6. The aforesaid conclusion is stoutly disputed by the petitioner. The petitioner submits that part of Clause 2.4 of the Agreement, which provides for the payment of fees, has been read out of context. The learned counsel for the petitioner submits that Clause 2.4 of the Agreement read as a whole clearly indicates that the fee paid to the petitioner is on cost plus basis.

7. Although the Adjudicating Authority has interpreted the Agreement, we find that there is insufficient analysis of the actual work performed by the petitioner. There is no material to relate the remuneration to the sales figure on empirical basis. The Adjudicating Authority has merely referred to a portion of Clause 2.4 of the Agreement, which provides that Netgear Technologies (India) Pvt. Ltd. would perform reconciliation of that year's sale, as a direct result of the service provider's activity and would reasonably approve the cost incurred by