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TMI Blog2025 (5) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... of service' under Section 2 (6) of the IGST Act; c) Hold that the Petitioner is not an intermediary' in terms of Section 2 (13) of the IGST Act and does not meet the requirements of an intermediary that are laid down in the CBIC Circular dated 20.09.2021; d) Sanction refund of Rs. 1,09,42,824/- being the accumulated ITC relating to the export of customer support services to Foreign Affiliate-during the period October 2019 to March 2020 along with applicable interest vide Annexure-A. e) Sanction refund of Rs. 2,52,29,456/- by including the credit availed the Petitioner on input services under HSN Code 9954 i.e., Construction services, during the period October 2019 to March 2020 in the 'N-for calculating the maximum refund to the Petitioner along applicable interest vide ANNEXURE-K. f) pass such further order(s) and other reliefs as the circumstances of the case may require. g) Issue a writ in the nature of certiorari or any other writ or order or direction under Article 226 of the Constitution of India quashing the show cause notice No. 08/2022 dated 01.09.2022 issued by respondent No. 2 at Annexure-M. 2. The brief facts giving rise to the present petition ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the petitioner and sanctioned refund of Rs. 28,30,90,158/- and rejected the refund claim to an extent of Rs. 2,52,29,456/-. 2.3 Aggrieved by the aforesaid order dated 25.11.2021, petitioner filed an appeal in GST.A. No. 108/2022-23 before 1st respondent - appellate authority to the extent of rejection of its refund claim in a sum of Rs. 2,52,29,456/-.; so also, the Department / Revenue (Deputy Commissioner - ND4 Division) also filed an appeal in GST.A. No. 116/2022-23 challenging the aforesaid order to the extent of allowing the refund claim of the petitioner in a sum of Rs. 1,09,42,824/-. In addition thereto, the 2nd respondent also issued a show cause notice dated 01.09.2022 to the petitioner proposing to recover the aforesaid alleged erroneous refund of Rs. 1,09,42,824/- from the petitioner, to which the petitioner submitted replies / letters etc., 2.4 By the impugned order at Annexure-A dated 04.01.2024, the 1st respondent - appellate authority dismissed the appeal filed by the petitioner and partially allowed the appeal of the Department to the extent of sanctioning refund in a sum of Rs. 1,09,42,824/-, thereby resulting in the rejection of the refund claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-VIL-224-DEL; 13. Commissioner of GST, Gurgaon II vs. Orange Business Solutions Pvt.Ltd., - 2019 (27) G.S.T.L. 523 (Tri-Chan.) 14. Evalueserve.com Pvt. Ltd. Vs. CST, Gurgaon - 2019(365) E.L.T. 546 (Tri- Chan); 15. Macquarie Global Services Pvt. Ltd v. CCE & ST, Gurgaon, 2021-TIOL-790-CESTAT-CHD. 5. Per contra, learned counsel for the respondents - Revenue would reiterate the various contentions urged in the statement of objections and submits that there is no merit in the petition and that the same is liable to be dismissed. 6. I have given my anxious consideration to the rival submissions and perused the material on record. 7. Before proceeding further, it is relevant to state that the present petition is restricted to rejection of the refund claim of the petitioner pertaining to the issue of "intermediary" in that, the respondents have rejected the refund claim in relation to customer support services provided by the petitioner by holding that the petitioner was an "intermediary" within the meaning of Section 2 (13) of the IGST Act and that the customer support services provided by the petitioner does not qualify as export of services under Section 2 (6) of the IGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of this Agreement; and B. Provider desires to perform the Services pursuant to the terms of this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises contained In this Agreement, and for other good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, Recipient and Provider agree as follows: 1. Services. Provider and Recipient agree that Provider shall provide (or cause to be provided) Services to Recipient pursuant to this Agreement as from time to time requested by Recipient orally or in writing; provided, however, that Provider reserves the right to decline to render, or cause to be rendered, any Services where Provider, in its sole judgment, does not have adequate facilities, personnel or resources to perform or cause to be performed the Services, or where providing the Services would violate Provider's policies or applicable law. Recipient shall provide Provider with sufficient information and assistance as reasonably requested by Provider to enable Provider to provide the Services or cause the Services to be provided. Provider shall provide the Services or cause the Services to be provided in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... replacements, renewals, extensions, future equivalents and restorations thereof, now or hereinafter in force and effect; and (b) any and assigned from any third party or 2.2 Derivative Works. "Derivative Works" shall include any and all new or enhanced Intellectual Property and works created in or from the process of use of the existing Intellectual Property by Provider in providing services per this Agreement. 3. Pricing and Payment. 3.1. Accounting Principles. All aspects of preparation, presentation, and reporting in regards to this Agreement shall be conducted pursuant to accounting principles set forth on Exhibit C. 3.2. Service Fees. In consideration of Provider's performance of the Services, Recipient shall pay to Provider the fees set forth on Exhibit C attached hereto together with any Taxes Invoiced to Recipient in accordance with Section 8.2 (collectively, the "Service Fees). Service Fees may be paid by cancellation of amounts owing by Provider to Recipient. 3.3. Invoices. Provider will invoice Recipient on a monthly basis unless otherwise defined in Exhibit C attached hereto for the Service Fees. For agreements with a mid-month effective date (any effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recipient may upon reasonable notice and during normal business hours examine and make copies of all books and records relating to the Services. 3.6. Arm's Length Price. It is the intent of the parties that the price paid by Recipient for the Services hereunder equal the price that an unrelated third party would have charged for the Services purchased by Recipient (such amount hereinafter referred to as an "Arm's Length Price"). In the event that any taxing jurisdiction finally determines that the aggregate amount paid to Provider hereunder is not equal to an Arm's Length Price, Recipient shall pay to Provider, as additional compensation hereunder, an amount equal to the difference between the amount actually paid by Recipient and the amount finally determined by such taxing jurisdiction to be an Arm's Length Price. A final determination for this purpose means a final judgment of a federal or state court, or other governmental court, of competent Jurisdiction not appealed from, or a final agreed assessment between the Parties and any tax authority with jurisdiction over the matter holding that the amount paid to Provider hereunder is not equal to an Arm's Len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as a result of this Agreement Provider has exclusive control over its employees, representatives. agents, contractors and subcontractors (collectively, "Personnel"), and over its employee relations and its policies relating to wages, hours, working conditions and other employment conditions Provider has the exclusive right to hire transfer, suspend, dismiss, recall. with its Personnel. Provider is responsible for all salaries and other compensation of its Personnel who provide Services and for making all deductions and withholdings from its employees' salaries and other compensation and paying all contributions, taxes and assessments. Provider's Personnel are not eligible to participate in any employment benefit plans or other benefits available to Recipient's employees. 5.2. Indemnity. Each Party ('Indemnifying Party") shall indemnify and hold harmless the other Party (Indemnified Party") and its Affiliates, licensees, permitted assigns, and subcontractors, and their respective directors, officers, and employees and agents from and against any and all claims, costs, losses, damages and expenses (including reasonable attorney fees and costs) arising out of or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rially breaches any of the material provisions of this any Agreement and fails to cure the same within thirty (30) days after receipt of written notice from the other Party; or 6.3.2. the other Party is unable to pay its debts when due, makes any assignment for the benefit of creditors, files any petition under the bankruptcy or insolvency laws, has a receiver or trustee to be appointed for its business or property, or is adjudicated bankrupt or insolvent, and fails to rectify the same within thirty (30) days after receipt of written notice from the other Party. 6.4. Effect of Termination. Any termination shall be without prejudice to any other right or remedy afforded to either Party under this Agreement or any applicable law, and will not affect any rights or obligations that have arisen prior to the date of such termination Subject to the foregoing, upon any termination or expiration of this Agreement, all rights and obligations of the Parties hereunder shall be extinguished, except (a) Recipient shall pay all compensation due under Section 3 for Services rendered, up to and including the date of termination, and (b) that Sections 4 through 8 shall survive and continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Agreement. 7.6 Headings. The headings of the sections of this Agreement have been set forth for use of reference only and shall not be used to construe or interpret the terms and conditions of this Agreement. 7.7 Execution of Agreement: Counterparts: Electronic Signatures. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Instrument. The exchange of coples of this Agreement and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in "portable document format" (".pdf") form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile shall be deemed to be their original signatures for all purposes. 7.8 Further Assurances. Each Party agrees to take suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to Provider the right to access and/or use any Intellectual Property that Recipient has rights to use that are required in order for the Provider to perform the designated Services listed on Exhibit B or agreed upon by both Parties from time to time per the terms of this Agreement. Recipient retains all rights and any Derivative Works if any may evolve in the course of Provider having access to or using any Intellectual Property in its course of the Provider meeting or carrying out its obligations under this Agreement as a Service Provider. EXHIBIT B CUSTOMER SUPPORT SERVICES "Services" may Include, but are not limited to, the following: a. Pre-sale customer services to prospective and existing e-commerce customers, or other service customers; b. Post-sale customer services to address inquiries from e-commerce customers, or other service customers; and c. Other services, as mutually agreed to by the parties, from time to time; d. Services will not include Provider entering into or negotiating any contracts for sale of Product or services offered by Recipient. e. Customer service communications shall be conducted via electronic mail, telephone or other means of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement. To the extent the advance payment differs from the Service Fees actually accrued during a given month, the excess advance payment will be credited against the next invoice for Service Fees, while any shortfall shall be added to the next invoice for Service Fees. Any excess advance payment will be repaid by the Provider to Recipient if this Agreement expires or is terminated. 11. Manner of Payment. Recipient may pay Service Fees hereunder by way of cash or by book entry offset against other amounts due and payable. Payment of Service Fees in cash shall be made in the Currency set forth herein, directly to Provider or to such bank as is designated by Provider. 12. Amazon Security Policy. Provider will comply in all respects with Amazon's Security Policy. Recipient may change the Security Policy, from time to time, at its sole discretion. Recipient, or retained third party, may audit and verify Provider's compliance with this Agreement. Such audit shall be conducted on prior written notice at the expense of Recipient and will be performed during Provider's normal business hours. ANNEXURE-D "Customer Services Agreement This Customer Services Agreement (th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity that is directly or indirectly controlled by, or under common control with Amazon.com, Inc. For this purpose, control will mean beneficial ownership of 50% or more of the outstanding equity Interests in a business entity. 2. Related Services. Provider agrees to provide Recipient with such other services as may be required by Recipient from time to time. Such services shall be negotiated on a case-by-case basis and set forth in either an addendum to this Agreement, a purchase order, or separate contract, as may be appropriate. Without limiting the foregoing intellectual property rights between the Parties as set forth on Exhibit A hereto. 3. Pricing and Payment. 3.1 Accounting Principles. All aspects of preparation, presentation, and reporting in regards to this Agreement shall be conducted pursuant to accounting principles set forth on Exhibit C. 3.2 Service Fees. In consideration of Provider's performance of the Services, Recipient shall pay to Provider the fees set forth on Exhibit C attached hereto together with any Taxes invoiced to Recipient in accordance with Section 8.2 (collectively, the "Service Fees") Service Fees may be paid by cancellation of amounts owi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement and for the later of (i) the expiration of the statute of limitations for any tax return filed by the parties to this agreement that would be impacted by adjustments to the Service Fees or (ii) three years thereafter, Recipient may upon reasonable notice and during normal business hours examine and make copies of all books and records relating to the Services. 3.6 Arm's Length Price. It is the intent of the parties that the price paid by Recipient for the Services hereunder equal the price that an unrelated third party would have charged for the Services purchased by Recipient (such amount hereinafter referred to as an "Arm's Length Price 7. In the event that any taxing jurisdiction finally determines that the aggregate amount paid to Provider hereunder is not equal to an Arm's Length Price, Recipient shall pay to Provider, as additional compensation hereunder, an amount equal to the difference between the amount actually paid by Recipient and the amount finally determined by such taxing Jurisdiction to be an Arm's Length Price. A final determination for this purpose means a final judgment of a federal or state court, or other governmental court, of compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suant to this Agreement are performed by such Party as an independent contractor on a non-exclusive basis, and nothing in this Agreement creates a partnership, joint venture, franchise or agency relationship between the Parties as a result of this Agreement. Provider has exclusive control over its employees, representatives, agents, contractors and subcontractors (collectively, "Personnel"), and over its employee relations and its policies relating to wages, hours, working conditions and other employment conditions. Provider has the exclusive right to hire, transfer, suspend, dismiss, recall, promote, discipline, discharge and adjust grievances with its Personnel. Provider is solely responsible for all salaries and other compensation of its Personnel who provide Services and for making all deductions and withholdings from its employees' salaries and other compensation and paving all contributions, taxes and assessments. Provider's Personnel are not eligible to participate in any employment benefit plans or other benefits available to Recipient's employees. 5.2 Indemnity. Each Party ("Indemnifying Party") shall indemnify and hold harmless the other Party ("Indemnified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atically terminate in the event that either Party ceases to be an Affiliate. 6.3 Termination for Breach. Either Party may terminate the Agreement, effective upon written notice to the other Party, if: 6.3.1. the other Party materially breaches any of the material provisions of this Agreement and fails to cure the same within thirty (30) days after receipt of written notice from the other Party, or 6.3.2. the other Party is unable to pay its debts when due, makes any assignment for the benefit of creditors, files any petition under the bankruptcy or insolvency laws, has a receiver or trustee to be appointed for its business or property, or is adjudicated bankrupt or insolvent, and fails to rectify the same within thirty (30) days after receipt of written notice from the other Party. 6.4 Effect of Termination. Any termination shall be without prejudice to any other right or remedy afforded to either Party under this Agreement or any applicable law, and will not affect any rights or obligations that have arisen prior to the date of such termination. Subject to the foregoing, upon any termination or expiration of this Agreement, all rights and obligations of the Parties hereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jeure. An "Event of Force Majeure" means unforeseen circumstances beyond a Party's reasonable control, including without limitation, acts of God, warriol embargoes, fire flood or earthquake, which circumstances prevent that Party from fulfilling is obligations under this Agreement. 7.6 Headings. The headings of the sections of this Agreement have been set forth for use of reference only and shall not be used to construe or interpret the terms and conditions of this Agreement. 7.7 Execution of Agreement Counterparts: Electronic Signatures. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument The exchange of copies of this Agreement and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in "portable document format (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute full payment and settlement to Provider of such amounts. The provider shall provide necessary support and documentation (including permanent account number) as may be required by the Recipient to discharge its obligations. If the a lower or no tax with reference to the payment by the Recipient to the Provider under this Agreement, the Recipient may consider such certificate in undertaking its tax withholding obligations. Provider confirms that it will pay any applicable taxes on its income, as applicable under this agreement on all amounts on which taxes are not withheld and file a return of income reporting such income under the applicable laws. Provider will be responsible for all other taxes (including interest and penalties) or fees arising from transactions and the documentation of transactions under this Agreement. EXHIBIT A INTELLECTUAL PROPERTY RIGHTS 1. Definitions 1.1. "Affiliate" as defined in Section 1 of the Agreement. 1.2. "Intellectual Property" means (a) any and all intellectual property rights, owned or otherwise held for the right to use, whether existing under intellectual property, unfair competition or trade secret laws, or under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to own, without any restrictions or limitations whatsoever, the sole and exclusive rights to all Intellectual. Property developed or acquired by Provider in the course of providing the Services throughout the world and in perpetuity, and Provider irrevocably, solely and exclusively assigns to Recipient, it successors and assigns, all right (including without limitation sublicensing rights), title, interest and ownership in and to such Intellectual Property. T the extent any of Provider's rights in such Intellectual Property, including without limitation any moral rights, are not subject to assignment under this Agreement, and to the extent such Intellectual Property includes material subject to copyright, patent, trade secret, or other proprietary right protection, Provider hereby irrevocably and unconditionally waives all enforcement of such rights. Provider will execute and deliver to Recipient such additional instruments, and take such other actions as Recipient may reasonably request to confirm evidence or carry out the grant of rights contemplated by this Section 2.2 of Exhibit A. EXHIBIT B SERVICES The Services shall consist of the services described in this Exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arm's Length Price for the provision of Services provided under this Agreement. The Service Fee calculation may be adjusted from time to time by the Parties in order to maintain an Arm's Length Price in accordance with the applicable regulations governing such transactions. 2. "Costs" means expenses incurred by Provider in performing the Services provided for hereunder, including, but not limited to: 2.1. Employee compensation and benefits; 2.2. Costs associated with hiring and overseeing independent contractors, reasonable out-of-pocket expenses incurred by Provider personnel in connection with Provider's performance of Services hereunder, 2.3. General and administrative expenses such as payroll, maintenance, and accounting: and 2.4. Provided, however, that Costs do not include interest expense, dividends paid by the Provider, foreign exchange expense or any other expense the Parties may from time to time mutually agree to exclude, as deemed appropriate. 3. "Other Costs" means certain expenses that both Parties agree to be charged at Cost. 4. "Costs Percentage(s)" is equal to: 15.0% (fifteen percent) 5. "Services Fees" means the Recipient shall pay or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the 20th September, 2021 Subject: Clarification on doubts related to scope of "Intermediary"-reg. Representations have been received citing ambiguity caused in interpretation of the scope of "Intermediary services" in the GST Law. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act"), hereby clarifies the issues in succeeding paragraphs. 2. Scope of Intermediary services 2.1 'Intermediary' has been defined in the sub-section (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as "IGST" Act) as under- "Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account." 2.2 The concept of 'intermediary' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be considered as supplier of intermediary service. 3.3 Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of "intermediary" itself provides that intermediary service provider means a broker, an agent or any other person, by whatever name called....". This part of the definition is not inclusive but uses the expression "means" and does not expand the definition by any known expression of expansion such as "and includes". The use of the expression "arranges or facilitates" in the definition of "intermediary" suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4 Does not include a person who supplies such goods or services or both or securities on his own account: The definition of intermediary services specifically mentions that intermediary "does not include a person who supplies such goods or services or both or securities on his own account". Use of word "such" in the definition with reference to supply of goods or services refers to the mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 'C' invoices 'A' and is paid by 'A' for the same. While 'A' and 'B' are involved in the main supply of the machinery, 'C', is facilitating the supply of machine between 'A' and 'B'. In this arrangement, 'C' is providing the ancillary supply of arranging or facilitating the 'main supply' of machinery between 'A' and 'B' and therefore, 'C' is an intermediary and is providing intermediary service to 'A'. Illustration 2 'A' is a software company which develops software for the clients as per their requirement. 'A' has a contract with 'B' for providing some customized software for its business operations. 'A' outsources the task of design and development of a particular module of the software to 'C', for which "C' may have to interact with 'B', to know their specific requirements. In this case, 'C' is providing main supply of service of design and development of software to 'A', and thus, 'C' is not an intermediary in this case. Illustration 3 An insurance company 'P', located outside India, requires to process insurance claims of its clients in respect of the insurance service being provided by 'P' to the clients. For processing insurance claims, 'P' decides to outsource ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. A perusal of the aforesaid Circular will indicate that in order to qualify as intermediary services, the following pre-requisites have to be satisfied: (i) There must be a minimum of three parties; (ii) There must be two distinct supplies, one being the main supply and other being an ancillary supply of "arranging" or "facilitating" the main supply; (iii) The intermediary service provider must have the character of an agent, broker or any other similar person; (iv) Intermediary does not include a person who supplies such goods or services on his own account; (v) Sub-contracting for a service is not an intermediary service. 11. The aforesaid Circular also includes various illustrations, which are as under: 4. Applying the abovementioned guiding principles, the issue of intermediary services is clarified through the following illustrations: illustration 1 'A' is a manufacturer and supplier of a machine. 'C' helps 'A' in selling the machine by identifying client 'B' who wants to purchase this machine and helps in finalizing the contract of supply of machine by 'A' to 'B'. 'C' charges 'A' for his services of locating 'B' and helping in finalizing the sale of mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f providing customer care services to a BPO firm, 'B'. 'B' provides customer care service to 'A' by interacting with the customers of 'A' and addressing / processing their queries / complains. 'B' charges 'A' for this service. 'B' is involved in supply of main service 'customer care service' to 'A', and therefore, ''B' is not an intermediary. 12. A perusal of the aforesaid customer services agreements read with the aforesaid Circular is sufficient to come to the conclusion that in the absence of the requirements stipulated in the Circular, the petitioner cannot be construed or treated or considered as an "intermediary" and consequently, the impugned orders and show cause notice deserve to be set aside. 13. A perusal of the customer services agreements clearly indicates that the same expressly restricts the petitioner from acting as an agent and precludes it from entering or negotiating contracts for sale of products; the services provided by the petitioner is on principal-to-principal basis on the petitioner's own account and the petitioner is not acting in the capacity of an agent or broker coupled with the fact that the agreements specifically provide and stipulate that agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services are to be provided by the petitioner on a principal to principal basis. Further the petitioner is engaged by GI for actual performance of BPO services to the clients of GI located outside India. The arrangement requires the petitioner to complete the assigned processes/scope of work directly to the third parties located outside India. Copy of the MSA entered between the petitioner and GI stands annexed as annexure P1 along with the petition. 20. We have heard counsel for the parties at length and have perused the pleadings on record. 21. The primary issue that arises for consideration is as to whether the petitioner would be covered under the expression "intermediary" as defined under the provisions of the IGST Act and consequently the BPO services rendered by the petitioner under the MSA (annexure P1) be treated as "intermediary services" ? 22. For adjudication of such issue it would be necessary to advert to certain relevant statutory provisions : Integrated Goods and Services tax Act, 2017 S. 2. Definitions.-In this Act, unless the context otherwise requires :- (1) to (5). .. (6) 'export of services' means the supply of any service when,- (i) The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or coordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located. (5) The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held. (6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory. (7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the First Scheduled point of departure of that conveyance for the journey. (12) The place of supply of online information and database access or retrieval services shall be the location of the recipient of services. Explanation.--For the purposes of this sub-section, person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied, namely :- (a) the location of address presented by the recipient of services through internet is in the taxable territory ; (b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory ; (c) the billing address of the recipient of services is in the taxable territory ; (d) the internet protocol address of the device used by the recipient of services is in the taxable territory ; (e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the supplier of such goods or services may claim the refund of tax so paid." Central Goods and Services tax Act, 2017 "S. 2. Definitions.-In this Act, unless the context otherwise requires,- (1) to (4). .. (5) 'agent' means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another ; (6) to (121). .. S. 54. Refund of tax.-(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in [such form and] manner as may be prescribed. (2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of GST is eligible to claim refund of unutilized input-tax credit. 25. We have examined the MSA (annexure P1) in depth and which was imperative to take a view as regards the findings recorded in the impugned order dated February 15, 2021 (annexure P18). In para 16 of the impugned order the recitals of the MSA dated January 7, 2013 (annexure P1) as also certain clauses have been referred to while concluding the petitioner to be an "intermediary". The relevant extract of the recitals and the clauses in question read as follows : Master Services Sub-contracting Agreement between Genpact International, Inc., and Genpact India Recitals Whereas, GI is in the business of providing business process outsourcing and information technology services to its customers (each a "GI Customer," and, collectively, the "GI Customers" ) and establishing, maintaining and expanding mutually beneficial relationships with such GI Customers. Whereas, provider is an affiliates of GI and has agreed to act as non-exclusive subcontractor for GI, subject to, and in accordance with, the terms of this agreement ; Whereas, GI intends to appoint the provider or any of them as its sub-contractor(s) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g presentations for GI customers on existing and new product and service offerings; preparation for, and attendance at, appropriate conventions and industry meetings ; handling all public relations and advertising matters, etc. 3.2 GI account representatives. GI shall at all times have one or more specific senior personnel identified and appointed to serve each GI Customer (each, a "GI Account Representative") who shall be responsible for managing the relationship with each GI customer to whom they are assigned. GI and the applicable GI account representatives shall also be responsible for determining which providers and/or other GI provider affiliate(s) shall be assigned to perform services for each GI customer as per GI customer requirements (in consultation with the relevant providers and other GI provider affiliates) and for balancing to the extent feasible, the allocation of services among the providers and other GI provider affiliates so that each GI affiliate is providing Services in accordance with its capacity and capabilities. The GI account representatives for each customer shall also (a) be the primary contact for the providers in dealing with the respective GI custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd operating procedures. (c) Each provider shall update the standard operating procedures from time to time to reflect changes in the services being delivered. 5.2 Disaster recovery services. Provider shall provide to GI the disaster recovery assistance, co-operation and services, if any, that are relevant. Each provider shall be responsible for business continuity planning or disaster recovery to the extent set forth in a customer statement of work. 5.3 Reports. Each provider shall provide to GI, and directly to the GI customer, where so agreed, the reports set forth in the customer statements of work in accordance with the frequencies set forth therein. 5.4 Records retention.-Each provider shall retain applicable books and records in accordance with the records retention standards in accordance with law, or as required by GI or the GI customer, whichever is the longest. Article 7 service levels 7.1 General. The service levels mentioned in each customer statement of work shall be used to measure provider's performance (the "Service Levels"). For project based customer statement of work all the deliverables and the milestones or any other such measurement shall be u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntermediary" under section 2 (13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an "intermediary" ;- First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a third party. Third, the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an "intermediary" is to mediate between two parties, i. e., the principal service provider (the 3rd party) and the beneficiary (the agents principal) who receives the main service and expressly excludes any person who provides such main service "on his own account". 30. A bare perusal of the recitals and relevant clauses of the MSA reproduced hereinabove do not in any manner indicate that petitioner is acting as an "intermediary" so as to fall within the scope and ambit of the definition of "intermediary" under section 2 (13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice. 15. The aforesaid judgment of the Punjab and Haryana High Court has attained finality as is clear from the subsequent judgment in Genpact(2) supra, wherein the decision of the revenue / Department not to challenge the judgment in Genpact (1) before the Apex Court has been recorded as hereunder:- 'CM-6621-CWP-2022: Application is allowed and rejoinder to reply filed by the respondents is taken on record. 2. CWP-14151-2021 3. The petitioner is seeking writ of certiorari for quashing and setting aside Demand cum Show cause Notice No. 47/GST/GGM/2020-21, dated 30-3-2021 ("impugned notice") (Annexure P-29) issued by Principal Commissioner of GST & CX, Gurugram-respondent No. 1 under Sections 73 of the Finance Act, 1994 ("Act, 1994") read with Section 174 of Central Goods & Services Tax Act, 2017 ("CGST Act") requiring the petitioner to explain why the extended period of limitation in terms of proviso to Section 73(1) of the Finance Act, 1994 should not be invoked for recovery of refund of Rs. 2,64,92,41,846/- granted to the petitioner. 4. The impugned notice further requires the petitioner to explain why service tax of Rs. 16,73,74,91,090/- should not be demanded and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case. 10. Writ petition is allowed and notice dated 30-3-2021 (Annexure P-29) is set aside. 16. A similar view has been taken by the Delhi High Court in Singtel's case supra, as under:- 4. The aforesaid decisions arose in the background of SGIPL, which is a company based in India, being engaged in providing global telecommunication and ancillary support services, and it is claimed that part of its services is also exported. It entered into an agreement dated July 14, 2011 with SingTel, which is a licensed telecommunications service provider in Singapore. The aforesaid agreement envisaged SGIPL providing necessary infrastructure in India so as to enable SingTel to facilitate seamless global telecommunication services to its customers based in Singapore and other foreign territories. 5. The plea of the appellant in each of the matters as also canvassed before this court, has been that SGIPL merely procures services from other service providers in India viz., Airtel, Vodafone, Tata, Reliance, etc., and supplies the same to Singtel without any alteration ; and that SGIPL does not provide the aforesaid services of telecommunications "on their own account" and thus fall with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the 'intermediary' to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the 'intermediary' obtains must be passed back to the principal. Separation of value : The value of an intermediary's service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as 'commission'. Identity and title : The service provided by the intermediary on behalf of the principal are clearly identifiable. In accordance with the above guiding principles, services provided by the following persons will qualify as 'intermediary services' : (i) Travel agent (any mode of travel) (ii) Tour operator (iii) Stockbroker (iv) Commission agent [an agent for buying or selling of goods is excluded (v) Recovery agent Even in other cases, wherever a prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answered in the affirmative. It was held that since the recipient of the service Verizon US was outside India, Verizon India rightly treated it as an "export of service" and accordingly it was exempted from the liability of paying service tax. It was pointed out that the "recipient" of services is determined by the contract between the parties and this would depend on who has the contractual right to receive the services and who is responsible for the payment for the services provided to the service recipient ; there was no privity of contract between Verizon India and the customers of Verizon US ; while such customers may be "users" of the services provided by Verizon India but were not its recipients ; even though Verizon India may have been using the services of a local telecom operator but that would not mean that the services to Verizon US were being rendered in India ; and the place of provision of such service to Verizon US remains outside India. It is pertinent to mention that a reference was made to the decision of the apex court in the case of All India Federation of Tax Practitioners v. Union of India [2007] 293 ITR 406 (SC) ; (2007) 7 STR 625 (SC), wherein the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) in allowing the claim of the SGIPL for unutilized Cenvat credit inter alia observing that the decision in Verizon Communications India Ltd. (supra) was flawed and there was already an appeal pending against the view expressed therein before the apex court. Suffice it to note that the said action on the part of the Assistant Commissioner in trying to overreach the orders passed by the superior authority was deprecated by our court and inter alia a passing reference was made that the view that SGIPL is a provider of "intermediary services" was not correct and there was no option but for the Revenue to await the outcome of the appeals preferred by them before the learned Customs, Excise and Service Tax Appellate Tribunal. It was simultaneously observed that by that time even the learned Customs, Excise and Service Tax Appellate Tribunal had also dismissed the appeals, presumably vide the impugned order dated December 7, 2022. 17. The Delhi High Court has taken an identical view in Xilinx India's case supra, as under:- 2. The petitioner is a company incorporated under the Companies Act, 2013. It has its registered office in Hyderabad, Telangana and branch office in N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy in view of the Circular dated 20.09.2022 issued by the CBIC. The said circular, in unambiguous terms, clarifies as under: "5.1. In view of the above, it is clarified that a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India, which is also referred to as foreign company under Companies Act, are separate persons under CGST Act, and thus are separate legal entities. Accordingly, these two separate persons would not be considered as "merely establishments of a distinct person in accordance with Explanation I in section 8". 5.2. Therefore, supply of services by a subsidiary/sister concern/group concern, etc. of a foreign company, which is incorporated in India under the Companies Act, 2013 (and thus qualifies as a 'company' in India as per Companies Act), to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act, 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation I of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hird person and the second between agents / intermediary and principal; it follows therefrom that where a person himself performs the main supply as a sub-contract, he cannot be construed or treated as an 'intermediary' between two parties; this aspect has been clarified at paragraph - 3.5 of the aforesaid Circular which states that the supplier of main service sub-contracts the same to sub-contractors, such sub-contractors providing such main service on their own account cannot be deemed to be arranging or facilitating the main supply between the supplier and customers, as a result of which, such sub-contractors would not qualify as an 'intermediary'; in the instant case, the main supply of customer support services to be provided by the foreign affiliates is entirely sub-contracted to the petitioner who provides customer support services and accordingly, there is only one main supply which is being supplied and the necessary ingredients of two existence of two distinct supplies is neither satisfied nor fulfilled; as stated supra, that apart from the fact that there is no privity of contract between the petitioner and Amazon consumer entities / selling partners, operating and sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had also agreed to acquire facilities, equipment and staff to effectively do so. The services to be provided by Blackberry India to Blackberry Singapore under the agreement, as set out in Schedule A to the agreement, are described as "promotional and marketing; technical marketing assistance; and other related services". 19. The learned CESTAT had examined the agreement and had concluded as under (pages 201 and 202 in 124 GSTR): "30. It would, therefore, transpire from the agreement that: (i) The appellant is engaged in providing marketing, administrative and support service to Blackberry Singapore, as an independent contractor; (ii) The appellant is not an agent or broker of Blackberry Singapore. There is no relationship of principal and agent between Blackberry Singapore and the appellant. The arrangement between the appellant and Blackberry Singapore is on a principal-to-principal basis. Further, the appellant does not have any authority to represent or bind Blackberry Singapore, which further supports the fact that the appellant is not an agent of Blackberry Singapore and, therefore, is not an intermediary; (iii) The appellant is not engaged in facilitating any supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncept. The relevant extract of the said circular is set out below: "2. Scope of intermediary services 2.1. 'Intermediary' has been defined in the sub-section (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as 'IGST' Act) as under- '"Intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.' 2.2. The concept of 'intermediary' was borrowed in GST from the Service Tax Regime. The definition of 'intermediary' in the Service Tax law as given in rule 2 (f) of the Place of Provision of Services Rules, 2012 issued vide Notification No. 28/2012-S.T., dated June 20, 2012 was as follows: '"intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the "main" service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'intermediary services' specifically mentions that intermediary 'does not include a person who supplies such goods or services or both or securities on his own account'. Use of word 'such' in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary..." 24. It is clear from the aforesaid circular that Blackberry India cannot be considered as an intermediary in the context of the services rendered by it under the agreement. 25. This court had also considered a similar question albeit in the context of refund of input-tax credit under the Integrated Goods and Services Tax Act, 2017 in Ernst and Young Limited v. Additional Commissioner, CGST Appeals-II, Delhi : W.P. (C) No. 8600 of 2022, decided on March 23, 2023 [(2023) 113 GSTR 252 (Delhi).] and Ohmi Industries Asia Private Ltd. v. Assistant Commissioner, CGST : W.P. (C) No. 6838 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larifying that the role of a 'intermediary' is only supportive; in the instant case, the material on record clearly establishes that the petitioner cannot be said to be facilitating or arranging supply of services, since the meaning of "facilitation / arrangement" cannot be extended to cover the subject agreements, where the petitioner himself undertook to perform / execute the main service, particularly when the "main service" allegedly being facilitated separately / independently by the petitioner has not been identified by the respondents whose contention cannot be accepted on this ground also. 23. As stated supra, the petitioner is engaged in addressing the queries of customers of Amazon consumer entities / selling partners on their own account, which falls outside the scope and ambit of intermediary services as explained in illustration No.4 to the aforesaid Circular; in the case on hand, the material on record clearly indicates that the petitioner does not engage in marketing products or procuring orders for sale and is in fact, expressly / explicitly barred from entering into or negotiating any contracts for sale of produces or services in terms of the aforesaid agreements; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmediary' means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;" 20. A plain reading of the aforesaid definition makes it amply clear that an intermediary merely "arranges or facilitates" supply of goods or services or both between two or more persons. Thus, it is obvious that a person who supplies the goods or services is not an intermediary. The services provided by the intermediary only relate to arranging or facilitating the supply of goods or services from the supplier. In the present case, there is no dispute that the petitioner does not arrange or facilitate services to EY entities from third parties; it renders services to them. The petitioner had not arranged the said supply from any third party. 21. It is important to note that the adjudicating authority had also accepted that the petitioner has provided the services. As noted hereinbefore, the adjudicating authority had returned a categorical finding that "the party provides services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or securities on his own account. There may be services, which may entail outsourcing some constituent part to a third party. But that would not be construed as intermediary services, if the service provider provides services to the recipient on his own account as opposed to merely putting the third party directly in touch with the service recipient and arranging for the supply of goods or services. 24. Thus, even if it is accepted that the petitioner has rendered services on behalf of a third party, the same would not result in the petitioner falling within the definition of "intermediary" under Section 2 (13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party. 25. The assumption that the petitioner has acted as a buying and selling agent, is without any basis. The adjudicating authority had referred to the letter dated 4-4-2008 issued by RBI permitting E&Y Limited to open a branch office in India (that is establishing the petitioner) and further clarifying the activities that a branch office could carry on. The same included export-import of goods; rendering professional or consultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST from the service tax regime. The definition of 'intermediary' in the service tax law as given in Rule 2 (f) of the Place of Provision of Services Rules, 2012 issued vide Notification No. 28 of 2012-S.T., dated 20-6-2012 was as follows: '"intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the "main" service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account.' 3. Primary requirements for intermediary services The concept of intermediary services, as defined above, requires some basic prerequisites, which are discussed below: 3.1. Minimum of three parties.-By definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 2 (6) of the IGST Act, which defines the expression "export of services". Section 2 (6) of the IGST Act is set out below: "'export of services' means the supply of any service when,- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange (or in Indian rupees wherever permitted by the Reserve Bank of India); and (v) the supplier of service and the recipient of service are not merely establishment of a distinct person in accordance with Explanation 1 in Section 8;" 31. Section 13 of the IGST Act contains provisions for determining the place of services where the location of supplier or location of the recipient is outside India. Thus, the question whether the supply of service by the petitioner is outside India is required to be determined with reference to Section 13 of the IGST Act. 32. In terms of Section 13 (2) of the IGST Act, the place of supply of services except the services specified in sub-sections (3) to (13) is the location of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IGST Act, the place of supply of certain services would be the location of the supplier of the services. In terms of clause (b) of sub-section (8) of Section 13 of the IGST Act, the place of supply of intermediary services is the location of the supplier of services. In the present case, the place of supply of services has been held to be in India on the basis that the petitioner is providing intermediary services. As discussed above, the services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the services. Since the recipient of the services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of "export of services" as defined under Section 2 (6) of the IGST Act. 34. There is no dispute that the recipient of services-that is EY entities- are located outside India. Thus, indisputably, the services provided by the petitioner would fall within the scope of the definition of the term "export of service" under Section 2 (6) of the IGST Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary' has been defined in the sub-section (13) of Section 2 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as 'IGST' Act) as under- 'Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.' 2.2. The concept of 'intermediary' was borrowed in GST from the service tax regime. The definition of 'intermediary' in the service tax law as given in Rule 2 (f) of the place of provision of Service Rules, 2012 issued vide Notification No. 28 of 2012-ST, dated 20-6-2012 was as follows: 'Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the "main" service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his own account.' 3. Primary requirements for intermediary services The concept of intermediary services, as defined abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th or securities on his own account'. Use of word 'such' in the definition with reference to supply of goods or services refers to the main supply of goods or services or both, or securities, between two or more persons, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary." 42. It is, thus implicit in the concept of an "intermediary" that there are three parties, namely, the supplier of principal service; the recipient of the principal service and an intermediary facilitating or arranging the said supply. Where a party renders advisory or consultancy services on its own account and does not merely arrange it from another supplier or facilitate such supply, there are only two entities, namely, service provider and the service recipient. In such a case, rendering of consultancy services cannot be considered as "intermediary services" or services as an "intermediary". 44. Undisputedly, this question is also squarely covered by an earlier decisions of this Court in Ernst & Young Ltd. v. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esence of an individual", whether represented either as the service receiver or a person acting on behalf of the receiver, as under: "This implies that while a service in this category is capable of being rendered only in the presence of an individual, it will not matter if, in terms of the contractual arrangement between the provider and the receiver (formal or informal, written or oral), the service is actually rendered by the provider to a person other than the receiver, who is acting on behalf of the receiver. Illustration A modeling agency contracts with a beauty parlour for beauty treatment of say, 20 models. Here again is a situation where the modeling agency is the receiver of the service, but the service is rendered to the models, who are receiving the beauty treatment service on behalf of the modeling agency. Hence, notwithstanding that the modeling agency does not qualify as the individual receiver in whose presence the service is rendered, the nature of the service is such as can be rendered only to an individual, thereby qualifying to be covered under this rule." 53. We are, also, unable to accept that the services rendered by the petitioner can be covered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. As noticed above, the authorities concerned had also accepted the same as is apparent from some of the observations made in the impugned order. Neither the adjudicating authority nor the appellate authority had any material to doubt the petitioner's claim that it had rendered advisory services for making investments in India. We do not consider it apposite to remand the present petitions for fresh adjudication. The decisions in BSNL v. Union of India [BSNL v. Union of India, (2023) 4 HCC (Del) 394 : (2023) 115 GSTR 47] and in GAP International Sourcing (India) (P) Ltd. v. Commr. (CGST) [GAP International Sourcing (India) (P) Ltd. v. Commr. (CGST), (2023) 117 GSTR 107 : 2023 SCC OnLine Del 8443] relied upon by the Revenue in support of the aforesaid prayer are inapplicable in the facts of the present case. In BSNL v. Union of India [BSNL v. Union of India, (2023) 4 HCC (Del) 394 : (2023) 115 GSTR 47], the petitioner's claim for refund was rejected on the ground of limitation and not on merits. Thus, it was essential that the adjudicating authority consider the merits of the claim in the first instance. In GAP International Sourcing (India) (P) Ltd. v. Commr. (CGST) [GA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h mutual consent from time to time." 10. It is clear from the aforesaid terms, that the petitioner is not an intermediary, inasmuch, as the petitioner is neither facilitating the provision of services by a third entity nor acting as a middleman for procuring such services for its affiliate. The petitioner is, in fact, contracted to provide the services, and is the principal service provider in the context of the services provided by it - book keeping, payrolls, and accounts through the use of cloud technology. 11. In case of intermediary services, there are three entities - one providing the principal service, one receiving the principal service, and an intermediary who acts as an agent or a broker for facilitating or arranging such services for the service recipient. 12. In the present case, although the agreement does use the word 'agent' but is clear that the petitioner is not acting as an agent for procurement of services for the service recipient. It is, in fact, providing the principal service of "Bookkeeping, Payroll, and accounts, through the use of cloud technology". The fact that such services may be for the clients of the petitioner's affiliate, Boks Business S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also providing software development support services (hereinafter referred to as the "Services") to the Recipient from the Technology Centre located in Bangalore, Karnataka (India) and is willing to provide the Services to Recipient on continuous basis pursuant to the terms of this Agreement; WHEREAS, Provider has recently entered into a unilateral Advanced Pricing Agreement ("APA") with the Central Board of Direct Taxes, India ("CBDT") on March 28, 2016 and has agreed on the arm's length price of the Services provided to Recipient. The terms and conditions of the APA are binding on the Provider and are effective from April 1, 2009 through March 31, 2018 in respect of the covered transaction involving provision of the Services to Recipient; WHEREAS, as of April 1, 2007, Parties had entered into Research and Development Subcontracting Agreement relating to the provision Services (the "Original Agreement") subsequently revised w.e.f. 1 April 2008 till December 2010 and further extended w.e.f. 1 January 2011; WHEREAS, pursuant to APA entered between Provider and CBDT, Parties are desirous of giving effect to the terms of the APA and accordingly, intend to amend and restat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding shall primarily consist of writing and documenting the software module being developed. 1.5.4. Provider shall be fully responsible for the project management activities and fully control and supervise the entire process in relation to the end deliverable of the software module(s) being developed/tested by it and shall provide regular update to the Recipient for it to analyse the progress of the project against the project plan. Recipient shall not have any rights to access the facilities of the Provider, unless specifically authorised by the Provider. 1.5.5. Provider shall be responsible to undertake all quality control procedures with respect to the software modules developed/tested by it, in accordance with the standard guidelines provided by Recipient on the quality control procedures to be adopted for the rendition of the Services. 1.5.6. Provider shall perform unit testing' on the software modules developed by it and shall prepare test reports. After testing each individual module, all the tested modules will be sent to Recipient for integration and validation. Recipient shall, then, carry out system testing and various other tests in a specially designed testin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this Agreement. 2. CONSIDERATION, INVOICING AND PAYMENT TERMS 2.1. CONSIDERATION 2.1.1. In consideration for the performance of the Services by the Provider under this Agreement, the Recipient shall pay service fee ("Service Fee") to the Provider as follows, unless otherwise agreed in writing by the Parties. 2.1.2. Service Fee shall be calculated as the Costs incurred by the Provider in the provision of the Services plus a Service Mark-up as defined below. The total Consideration shall be calculated as follows: Consideration = Costs x (1 + Service Mark-up); where Costs include * Operating expenses incurred by the Provider in connection with provision of Services under this Agreement including depreciation and amortisation expenses relating to the assets used in the provision of the Services. Cost will also include any foreign exchange loss, either directly identifiable or reasonably allocable towards the Services under this Agreement. For the removal of doubt, it is clarified that in case of foreign exchange gain (either directly identifiable or reasonably allocable towards the Services), the same shall be reduced from the Service Fee for the purpose of invoicing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing bodies in accordance with applicable procedures of Nokia Group prior to implementation of any changes. 2.2.3. Provider will raise monthly invoice of the Service Fee on the Recipient as per Consideration methodology defined under clause 2.1 above. The invoice will be raised in Euros on the Recipient before the end of every month following the relevant month in which Services has been provided and the invoice is to be raised. 2.2.4. All the invoices under this Agreement shall be due and payable within a period of Ninety (90) days from the date of invoice. Where the weighted average period of realisation of invoices for a particular financial year is more than Ninety (90) days, the Provider shall be entitled to receive interest at the rate of I percent per month on the aggregate invoice amount of the financial year for excess realisation period. For the purpose of calculation of interest on late realisation, a month shall be assumed to comprise of 30 days. 2.2.5. Financial year ("FY") means twelve (12) month period starting April 1 of the calendar year and ending on March 31 of the following calendar year, as followed by the Provider for its local statutory and tax reporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. 3.3 Intermediary service provider to have the character of an agent, broker or any other similar person: The definition of "intermediary" itself provides that intermediary service provider means a broker, an agent or any other person, by whatever name called....". This part of the definition is not inclusive but uses the expression "means" and does not expand the definition by any known expression of expansion such as "and includes". The use of the expression "arranges or facilitates" in the definition of "intermediary" suggests a subsidiary role for the intermediary. It must arrange or facilitate some other supply, which is the main supply, and does not himself provides the main supply. Thus, the role of intermediary is only supportive. 3.4 Does not include a person who supplies such goods or services or both or securities on his own account: The definition of intermediary services specifically mentions Circular No. 159/15/2021-GST 3 that intermediary "does not inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his own account. (xi) In the instant case, none of the aforesaid criteria / requirement is fulfilled by the petitioner who provides services to its overseas entity on its own account and consequently, the services provided by the petitioner clearly cannot be construed or treated as intermediary services as wrongly held by respondents 2 and 5 in the impugned orders, which deserve to be set aside. In other words, the material on record clearly establishes that the activities of the petitioner is of software development and support as well as project management which are rendered by the petitioner on its own account and cannot be considered as intermediary services since the same are not services of arranging or segregating any other supply. (xii) In Genpact India (P) Ltd. v. UOI - 2022 SCC OnLine P&H 425, the Hon'ble Punjab & Haryana High Court held as under:- 29. As per definition of "intermediary" under Section 2 (13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an "intermediary";- First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as intermediary services, if the service provider provides services to the recipient on his own account as opposed to merely putting the third party directly in touch with the service recipient and arranging for the supply of goods or services 24. Thus, even if it is accepted that the petitioner has rendered services on behalf of a third party, the same would not result in the petitioner falling within the definition of 'intermediary' under Section 2 (13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party. (xiv) Similarly, in Ohmi Industries Asia (P) Ltd. v. Commr. (CGST) - 2023 SCC OnLine Del 2029, reiterating the view held in Ernst & Young (supra), the Delhi High Court held as under:- 15. The term intermediary is defined under Section 2 (13) of the IGST Act as under: "2 (13). 'Intermediary' means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated in India and a body corporate incorporated by or under the laws of a country outside India, which is also referred to as foreign company under Companies Act, are separate persons under CGST Act, and thus are separate legal entities. Accordingly, these two separate persons would not be considered as "merely establishments of a distinct person in accordance with Explanation I in section 8". 5.2. Therefore, supply of services by a subsidiary/sister concern/group concern, etc. of a foreign company, which is incorporated in India under the Companies Act, 2013 (and thus qualifies as a 'company' in India as per Companies Act), to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act, 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation I of section 8 of IGST Act 20 I7. Similarly, the supply from a company incorporated in India to its related establishments outside India, which are incorporated under the laws outside India, would not be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the refund claim of the petitioner by passing the impugned orders and SCNs which are illegal, arbitrary and contrary to law and facts and without jurisdiction or authority of law warranting interference by this Court in the present petition. 15. In the result, I pass the following: ORDER (i) Petition is hereby allowed. (ii) The impugned orders at Annexure-A dated 18.05.2022 passed by 2nd respondent, the impugned show cause notice at Annexure-B dated 06.09.2021 issued by 4th respondent, impugned show cause notice at Annexure-C dated 07.07.2022 issued by the 5th respondent and the impugned order at Annexure-AG dated 26.07.2022 passed by the 5th respondent are hereby quashed. 29. In the light of the aforesaid discussion and the facts and circumstances narrated supra and the principles laid down in the aforesaid judgments, I am of the considered opinion that the petitioner is not an "intermediary" under Section 2 (13) of the IGST Act in terms of the Circular dated 20.09.2021 and the Customer support services provided by the petitioner to foreign affiliates qualify as export of service under Section 2 (6) of the IGST Act and consequently, the impugned orders and show c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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