Marketing and Technical Support Services Deemed Export, Not Intermediary Services, Leading to Refund Sanction
In a significant decision by the Karnataka High Court, M/s Excelpoint Systems (India) Pvt Ltd. has been granted a refund of Rs. 18,92,697/- along with applicable interest, following the court's ruling that the services provided by the company qualify as export of services rather than intermediary services under the Integrated Goods and Services Tax (IGST) Act, 2017.
The decision was delivered by Justice S.R. Krishna Kumar, who presided over the case, emphasizing that the Marketing Support Services and Technical Support Services rendered by Excelpoint to its foreign parent company do not fall under the definition of intermediary services as per Section 2(13) of the IGST Act. Instead, these services qualify as export of services under Section 2(6), thereby entitling Excelpoint to the sought refund.
Excelpoint Systems had initially filed a refund claim for the period from April 2021 to March 2022, which was rejected by the authorities on the grounds that the services were considered domestic supplies. The rejection was upheld by the Appellate Authority, prompting Excelpoint to approach the High Court.
The High Court referred to several precedents, including judgments in cases involving M/s Amazon Development Centre India Pvt. Ltd. and M/s Columbia Sportswear India Sourcing Pvt. Ltd., which supported Excelpoint's claim that their services qualify as export, not intermediary services. The court noted that the Master Service Agreement and related documents confirmed that Excelpoint was not acting as an intermediary, as it did not facilitate the supply between two or more entities but provided services on its own account.
Justice Krishna Kumar's judgment directed the respondents, including the Joint Commissioner of Central Tax (Appeals-I), to process and sanction the refund claim within three months. This decision is expected to set a precedent for similar cases where the definition of intermediary services under the IGST Act is contested.
Bottom Line:
Services provided by the petitioner under the Master Service Agreement do not amount to intermediary services under Section 2(13) of the IGST Act, 2017, and qualify as export of services under Section 2(6) of the IGST Act, 2017. Refund of Rs.18,92,697/- with applicable interest directed to be granted to the petitioner.
Statutory provision(s): Section 2(13) of IGST Act, 2017; Section 2(6) of IGST Act, 2017; Section 13(8)(b) of IGST Act, 2017; Section 54 of the IGST Act, 2017.
