Full Judgment Text
2022/DHC/005541
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 14.12.2022
+ W.P.(C) 8876/2021 and CM APPL. 51970/2022
SINGTEL GLOBAL INDIA PVT. LTD ..... Petitioner
versus
UNION OF INDIA & ORS. ..... Respondents
Advocates who appeared in this case:
For the Petitioner : Mr. Kamal Sawhney with Mr. Krishna Rao
and Ms. Aakansha Wadhwani, Advocates.
For the Respondents : Mr. Satish Kumar, Senior Standing
Counsel with Mr. Dheeraj Sharma,
Assistant Commissioner alongwith
Ms. Vaishali Goyal, Advocate for R-2&3.
CORAM
HON’BLE MR JUSTICE VIBHU BAKHRU
HON’BLE MR JUSTICE PURUSHAINDRA KUMAR KAURAV
JUDGMENT
VIBHU BAKHRU, J
1. Singtel Global India Pvt Ltd. – a company incorporated in India
has filed the present petition impugning an order dated 28.08.2020
(hereafter ‘ the impugned order ’), passed by the Assistant
Commissioner, Central Tax, Central Excise & Service Tax (hereafter
‘ the Assistant Commissioner ’) denying the claim for refund of
₹8,69,82,565/- and ₹3,30,37,934/- for unutilized input tax credit. The
petitioner had made the said claim for the period of October, 2015 to
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December, 2016 and for the period of January, 2017 to June, 2017,
respectively.
Factual Context
2. The controversy, in the present petition, relates to the petitioner’s
claims for unutilised input tax credit relating to three separate periods:
July, 2015 to September, 2015; October, 2015 to December, 2016; and
January, 2017 to June, 2017.
3. The petitioner is, inter alia , engaged in providing
telecommunication services and claims that a part of its services are
exported. The petitioner claims that export of services are zero rated,
and the input tax credit available to it remained unutilised. The
petitioner applied for a refund of input tax credit for an amount of
₹1,32,70,532/- for the period July, 2015 to September, 2015.
4. The adjudicating authority (the Assistant Commissioner)
examined the said claim and had found that the petitioner was engaged
in the export of services and therefore, was entitled to refund of the
unutilised input tax credit in relation to the said services. The
petitioner’s claim was duly verified and the learned Assistant
Commissioner held that a refund of a sum of ₹1,32,70,532/- was found
due to the petitioner. The said amount was computed by apportioning
the available input tax credit in the ratio of export turnover to the total
turnover for the given period.
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5. The learned Assistant Commissioner had passed an order dated
18.06.2018, directing that the said amount of ₹1,32,70,532/- be
transferred to the bank account of the petitioner. The Revenue appealed
the said order before the learned Commissioner (Appeals), which was
rejected by an order dated 31.01.2019. The principal ground urged by
the Revenue was that the petitioner had merely procured services for
their overseas clients; thus, the petitioner was an intermediary and not
the service provider, providing services on his own account.
6. The learned Commissioner (Appeals) found that the said issue
was covered by the decision of this Court in Verizon Communication
India Pvt. Ltd. v. Assistant. Commissioner Service Tax: 2018 (8)
G.S.T.L. 32 (Del.) , and rejected the appeal.
7. The Revenue appealed the said decision before the Customs,
Excise and Services Tax Appellate Tribunal (hereafter ‘ the CESTAT ’).
8. In respect of the second period from October, 2015 to December,
2016, the petitioner claimed refund of an amount of ₹8,69,82,565/-. The
petitioner also provided all the necessary details including copies of the
input service invoices for the said period. The petitioner’s claims were
rejected on the ground that the services, rendered by the petitioner, fell
within the category of “ intermediary services ”. The adjudicating
authority (the Assistant Commissioner) found that the conditions
specified in Clause (d) of Rule 6(A)(1) of the Service Tax Rules, 1994
were not satisfied and the services, rendered by the petitioner, did not
qualify as export of services. On the basis of the said finding, by an
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order dated 22.10.2018, the learned Assistant Commissioner rejected
the petitioner’s claim for the refund of the input tax credit.
9. The petitioner appealed against the said decision to the learned
Commissioner (Appeals.) The said appeal was allowed by an order
dated 05.07.2019. The learned Commissioner (Appeals), following the
decision in Verizon Communication India Pvt. Ltd. v. Assistant.
Commissioner Service Tax ( supra ) , which held that the petitioner was
not an intermediary and was engaged in the export of his services on his
own account.
10. The Revenue filed an appeal against the order dated 05.07.2019,
passed by the learned Commissioner (Appeals), before the learned
CESTAT .
11. The petitioner’s claim for refund of input tax credit against export
services for the period January, 2017 to June, 2017 met the same fate as
the petitioner’s claim for the October, 2015 to December, 2016 period.
The adjudicating authority declined the said claim and accordingly,
passed an order dated 23.07.2019. By an order dated 01.11.2019, the
learned Commissioner (Appeals) allowed petitioner’s appeal against
the said order.
12. The Revenue appealed the said decision before the learned
CESTAT.
13. The learned CESTAT had disposed of the appeals preferred by
the Revenue for the aforementioned three periods by a common order
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dated 07.12.2022. The learned CESTAT held that the petitioner was not
an intermediary and was, inter alia , engaged in the export of
telecommunications services. The relevant extract of the said order
reads as under: -
‘23. In the present case, what transpires from the
aforesaid Agreement dated 14.07.2011 is that
SingTel is a licensed telecommunication
service provider in Singapore. It, on its own or
through one or more of its affiliates or
suppliers, has the capability to provide services
in foreign territories. SGIPI is a licensed
provider of certain telecommunication services
in India and provides, or can procure, certain
telecommunication services in India. SGIPL
desired to supply and SingTel had agreed to
procure from SGIPL services necessary and
ancillary to enable SingTel to provide to its
customers seamless global telecommunication
services upon the terms set out in the
Agreement. The responsibilities of SGIPL are
contained in clause 4 of the Agreement. Clause
4.3 provides that SGIPL shall provide, at its
own expense, all facilities and resources
whatsoever necessary to enable it to provide
services to SingTel. In terms of clause 4.7,
SGIPL shall bill on SingTel for the services
provided by it. The responsibilities of SingTel
are contained in clause 5 of the Agreement.
Clause 6 of the Agreement deals with charges
and payment. It provides that SGIPL will
invoice SingTel in US dollars for the services
by the end of the month following the month of
the provision of services and SingTel will be
required to pay such monthly invoices within
30 days of the date of such monthly invoices.
Both the parties also agreed on the transfer
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pricing adjustments to prices at any time in
order to ensure that prices are at acceptable at
arm's length. Clause 19 of the Agreement
specifically provides that the relationship of the
parties to the Agreement shall always and only
be that of independent contractors and nothing
in the Agreement shall create or be deemed to
create a partnership or the relationship of
principal and agent or employer and employee
between the parties.
24. The Agreement executed between SGIPL and
SingTel leaves no manner of doubt that SGIPL
is not an intermediary. There is no contract
between SingTel and the operators in India like
Airtel. SGIPL may have used the services of
telecom operators in India but this would not
mean that these telecom operators are
providing services to SingTel. Such steps have
been taken by SGIPL in terms of the
Agreement entered with SingTel. What is also
important to notice in that SGIPL has to
provide, at its own expenses, all facilities and
resources necessary to enable SGIPL to
provide the services to SingTel. It is SGIPL
which bills SingTel for the services provided
by it in US dollars and SingTel has to make the
payment within 30 days of the date of such
monthly invoices. The Agreement also
specifically provides that the relationship of the
parties to the Agreement shall always and only
be that of independent contractors and nothing
shall create or be deemed to create a
partnership or the relationship of principal and
agent or employer and employee between the
parties. The terms of the Agreement also perse
do not create any relationship of principal and
agent or employer and employee. An agent is a
person employed to do any act for another or to
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represent another in dealing with third persons.
The persons for whom such act is done, or who
is so represented, is the principal. A broker is a
middleman or an agent who, for a commission
on the value of the transaction, negotiates for
others the purchase or sale of stocks, bonds,
commodities, or a property. These two
situations do not arise in the present case.
25. An intermediary is a person who arranges or
facilitates provision of the main service
between two or more persons. SGIPL is not
involved in the arrangement or facilitation of
the supply of service. In fact, it has entered into
two Agreements; one with SingTel and the
other with the Indian telecommunication
service providers. It needs to be noted that
SingTel had entered into Agreements with end
customers for providing telecommunication
services and it is for the provision of this
telecommunication services that SingTel
entered into an Agreement with SCIPL on a
principal to principal basis. SGIPL entered into
agreements with the Indian telecommunication
service providers for providing bandwidth so
as to enable it to provide the required services
to SingTel for its customers. Thus, the two
Agreements are distinct and independent from
each other. SGIPL provides the main service ie.
telecommunication service to SingTel on its
own account. The telecommunication service
provided by SGIPL qualify for export since it
is providing telecommunication services to
SingTel which is outside India and is receiving
convertible foreign exchange for such services.
SGIPL is not a privy to the Agreement entered
into between SingTel and its end customers.
Merely because SGIPL is charging handling
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fee on SingTel would not mean it is an
intermediary.”
14. In the meantime, the petitioner sent communications requesting
for a refund of the input tax credit that was allowed by virtue of the
aforementioned orders passed by the learned Commissioner (Appeals).
The said application was rejected by the impugned order. The learned
Assistant Commissioner did not process the refund as directed by the
orders passed by the learned Commissioner (Appeals), but took upon
itself to once again re-examine the question as to whether the petitioner
was entitled to refund of input tax credit.
Reasons and Conclusion
15. A plain reading of the impugned order indicates that the learned
Assistant Commissioner rejected the petitioner’s claim by questioning
the decision of the learned Commissioner (Appeals) to allow the
petitioner’s appeal and reject the Revenue’s appeals. The learned
Assistant Commissioner held that the learned Commissioner (Appeals)
has erred in following the decision of this Court in Verizon
Communication India Pvt. Ltd. v. Assistant. Commissioner Service
Tax ( supra ) , on the ground that the Special Leave Petition against the
said decision is pending before the Supreme Court. This is evident from
the following extract of the impugned order:
“9.3 The commissioner (Appeals -II) in their OIAs
appears to relied on the judgment of Hon’ble Delhi
High Court in the case of Verizon Communication
India Pvt. Ltd. Vs. ACST [2018(8) GSTL 32 (Del)]
and intermediary essentially excludes any person
who has provided the service on their own account.
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The matter heavily relied upon the above said
judgment but they did not appreciated the fact that
the said order is pending before the Hon'ble
Supreme Court of India and the same has not
attained its finality till date. In other words, it is
sub- judice and the decision of Hon'ble High Court
cannot be considered as conformity of the issue in
this scenario, rely on such case could not be framed
in the instant case
9.4 Further, I have also peruse the said case of Verizon
Communication India Pvt Ltd: and it is observed
that the Judgment taken chronically from the
previous provision prior to July 2012 but after w.e.f
01.07.2012 there is no specific discussion was
made in respect of Rule 6A of the Service Tax
Rules, 1994, as amended and Place of Provision of
Service Rules, 2012, as amended The
chronological point comes to in conclusive stage
but when came to w.e.f 01.07 2012 there is only
observation noted after perusal of Para 22 Para 30,
Para 32 Para 46 to Para 49 as already noted
provision of telecommunication services does not
have a specific rule and so Rule 3 of the POPS
Rules, which is the default option, applies In terms
thereof, the place of provision of
telecommunication service shall be the location of
the recipient of service"
Further, the relied upon judgment was like Paul
Merchants Ltd. v CCE. Chandigarh 2012 (12) TMI
424 CESTAT Microsoft Corporation (1) (P) Ltd. v
Commissioner of Service Tax, New Delhi 2014-
TIOL-1964-CESTAT DEL=2014 (36) STR 766
(T) are still pending before the Hon'ble Supreme
Court and till the decision it could not be
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considered as enforced law but under sub-judice
law.”
16. The Assistant Commissioner has sought to re-adjudicate the
question as to whether the services provided by the petitioner are export
of services or not. This is clear from paragraph 9.2 of the impugned
order which reads as under: -
“9.2 The instant case is totally depending to ascertain
whether the service provided by the assessee is
export or not. If it falls under export of service,
then there is no criterion for checking of unjust
enrichment whereas if it does not fall under the
category of export, it should be considered for
verification under unjust enrichment. Hence, it
is indirectly stipulate to check whether the
service provided by the assessee falls under the
provisions of Export or not. “
17. The impugned order has been passed in complete disregard of the
judicial discipline. It is, ex facie , apparent that the learned Assistant
Commissioner has attempted to overreach the orders passed by the
superior authority.
18. Since the respondent was seeking to defend the impugned order,
this Court had called upon Mr. Raghupathy Ramachandran, Senior
Standing Counsel, Central Board of Indirect Taxes and Customs
(CBIC), to also file written submissions even though he was not
appearing in the present petition. He has fairly submitted that the
impugned order, which proceeds on the basis that the petitioner is a
provider of intermediary services, is incorrect and it is not open for the
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Revenue to take this stand. The Revenue would necessarily have to wait
for the outcome of the appeals preferred by the learned CESTAT (which
have since been dismissed as well).
19. The learned counsel appearing for the respondent fairly states
that the impugned order be set aside.
20. In view of the above, the petition is allowed. The impugned order
is set aside.
21. The respondent is directed to process the petitioner’s application
within a period of four weeks from today.
22. The respondent shall also consider the petitioner’s entitlement to
interest considering the delay in processing its application.
23. The petition is disposed of. The pending application is also
disposed of.
VIBHU BAKHRU, J
PURUSHAINDRA KUMAR KAURAV, J
DECEMBER 14, 2022
Ch
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