2025 (6) TMI 1151 - HC - GST

Services being rendered by the Petitioner would constitute exports or not - hosting data services provided by a service provider located in India - HELD THAT - It is deemed appropriate that instead of entertaining the challenge in these writ petitions the Appellate Authority shall reconsider the impugned orders once again in light of the Appellate Authority s order dated 31st December 2024 and 1st January 2025 as also the Circular No. 232/26/2024-GST dated 10th September 2024. Clearly the impugned orders which are challenged before this Court were passed prior to the Orders-in-Appeal dated 31st December 2024 and 1st January 2025 which are relied upon by the Petitioners. The impugned Orders-in-Appeal are set aside. The matters are remanded to the Commissioner (Appeals) for reconsideration - petition allowed by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Court was whether the services rendered by the Petitioner, specifically hosting data services provided by a service provider located in India, would constitute exports under the applicable Goods and Services Tax (GST) regime. This encompassed the interpretation of export of services under GST law, the applicability of relevant circulars and appellate orders, and the entitlement to refunds claimed on the basis of such export classification.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Whether the services rendered by the Petitioner constitute exports under GST law

Relevant legal framework and precedents: The Court examined Circular No. 232/26/2024-GST dated 10th September, 2024, which clarified that supply of hosting data services by service providers located in India shall be considered exports. Further, the Court reviewed prior Orders-in-Appeal dated 31st December, 2024 and 1st January, 2025, passed by the Appellate Authority, which had held identical services rendered by the Petitioner as exports. These orders were not challenged by the Respondent-Department and had attained finality. Additionally, Orders-in-Original dated 11th March, 2024 and 16th April, 2024 in favour of the Petitioner, also recognizing the services as exports, were considered.

Court's interpretation and reasoning: The Court recognized that the impugned Orders-in-Appeal challenged by the Petitioner were passed prior to the above-mentioned favorable appellate orders and the clarificatory circular. Given that the GST Circular explicitly classified hosting data services as exports, and consistent appellate decisions had been rendered in favor of the Petitioner, the Court found it appropriate to direct a reconsideration of the impugned orders in light of the latest authoritative pronouncements.

Key evidence and findings: The Court took note of the unchallenged appellate orders dated 31st December, 2024 and 1st January, 2025, which had annulled the rejection of refund claims made by the Petitioner under the category "exports of goods/services without payment of tax." The refunds had also been issued to the Petitioner pursuant to these orders. The circular dated 10th September, 2024 further fortified the position that hosting data services qualify as exports.

Application of law to facts: The Court applied the clarificatory circular and the binding appellate orders to the facts of the present writ petitions, concluding that the impugned orders, which had rejected the export classification and refund claims, were inconsistent with the subsequent authoritative rulings and clarifications. The Court emphasized that the impugned orders were rendered prior to these developments and thus required reconsideration.

Treatment of competing arguments: The Respondent-Department did not challenge the favorable appellate orders and conceded their finality. The Petitioner argued for recognition of their services as exports based on the circular and appellate decisions. The Court found no merit in allowing the impugned orders to stand in contradiction to settled law and authoritative clarifications.

Conclusions: The Court set aside the impugned Orders-in-Appeal and remanded the matters to the Commissioner (Appeals) for fresh adjudication in light of the circular and the subsequent appellate orders. The Court mandated that the appeals be decided within four months after affording the Petitioner an opportunity for personal hearing.

3. SIGNIFICANT HOLDINGS

The Court held: "Considering this position, it is deemed appropriate that instead of entertaining the challenge in these writ petitions, the Appellate Authority shall reconsider the impugned orders once again in light of the Appellate Authority's order dated 31st December, 2024 and 1st January, 2025 as also the Circular No. 232/26/2024-GST dated 10th September, 2024."

The Court established the principle that where subsequent authoritative clarifications and appellate decisions have settled a legal question, earlier adverse orders must be reconsidered to ensure consistency with the current legal position.

Final determinations included the setting aside of the impugned Orders-in-Appeal and remand for reconsideration within a stipulated timeframe, thereby ensuring procedural fairness and adherence to the clarified legal framework regarding export of services under GST.