Infodesk India Pvt. Limited vs The Union Of India on 2 January, 2025

Outcome**
The High Court allowed the petitions, quashing and setting aside the Order-in-Appeal and Order-in-Original. It directed the respondents to process the petitioner's refund claims within twelve weeks, considering the services provided as "export of service" and acknowledging that the claims were filed within the limitation period.

2. Core Issue
The core issue was twofold:
1. Whether the software consultancy and related IT services provided by Infodesk India Pvt. Limited (petitioner), a wholly-owned subsidiary, to its US-based parent company constitute "export of service" under Section 2(6) of the Integrated Goods and Service Tax Act, 2017 (IGST Act), or "intermediary services" under Section 2(13) of the IGST Act.
2. Whether the refund applications for Input Tax Credit (ITC) filed by the petitioner were time-barred under Section 54(1) of the Central Goods and Services Tax Act, 2017 (CGST Act).

3. Key Facts
* Infodesk India Pvt. Limited (petitioner) is registered under the CGST Act and provides content integration, software development, editorial, IT infrastructure, customer support, and custom report generation services exclusively to its US-based parent company, InfoDesk. Inc.
* A service agreement dated 21st February 2011 governs the relationship, wherein the petitioner assists the US entity in its business operations and development.
* The parent company communicates requirements through "JIRA tickets," and the petitioner deploys employees to fulfill these tasks.
* The petitioner issues tax invoices to its parent company and avails ITC on inputs and input services used in providing these services.
* The petitioner filed refund applications, asserting that its services qualified as "export of service" (zero-rated supply under Section 16 of the IGST Act).
* Respondent No. 3 (the tax authority) proposed to reject the refund applications, arguing that they were time-barred under Section 54(1) of the CGST Act and that the services were "intermediary services" under Section 2(13) of the IGST Act, thus not qualifying as export of service.
* The petitioner contended that its services were rendered on a principal-to-principal basis and that the online filing date, not the physical submission date, should be considered for limitation.
* The Order-in-Original (16th December 2019) and subsequent Order-in-Appeal (1st October 2020) rejected the refund on both grounds: being time-barred and classifying the services as intermediary.
* Given the unavailability of the Appellate Tribunal under Section 110 of the CGST Act, the petitioner challenged these orders before the High Court.

4. Arguments
* Taxpayer (Infodesk India Pvt. Limited):
* The services are provided on a principal-to-principal basis directly to the US parent company, and the petitioner acts on its own account, not as a broker or agent facilitating supply between two or more other persons. Therefore, the services do not fall under the definition of "intermediary" in Section 2(13) of the IGST Act.
* The service agreement is bipartite, involving only two parties, which contradicts the "two or more persons" requirement for intermediary services.
* The petitioner provides the "main service" of software consultancy, not ancillary services.
* The refund application was filed online within the stipulated two-year limitation period, and this online filing date, generating an ARN, should be the relevant date, not the later physical submission date.
* Relied on Circular No. 159/15/2021-GST and various High Court judgments.
* Revenue (Union of India & Ors.):
* The petitioner is operating as an "intermediary" for its parent company in arranging or facilitating services.
* The refund application was time-barred, considering the date of physical submission of the documents.

5. Court’s Reasoning
* On Intermediary Services:
* The Court meticulously examined the definition of "intermediary" under Section 2(13) of the IGST Act, noting its crucial exclusion: "but does not include a person who supplies such goods or services or both or securities on his own account."
* Analyzing the service agreement, the Court found that the petitioner was contractually bound to assist the US entity in its business of software development, editorial services, etc. The payment structure involved the petitioner receiving its cost plus an 8% mark-up, indicating it operated as an independent entity earning profit, not merely a facilitator.
* The agreement also stipulated that the petitioner would bear its own expenses (salaries, taxes, etc.) and contained an arbitration clause for disputes between the two parties, further reinforcing the principal-to-principal relationship.
* The Court concluded that the petitioner was an independent company providing services on its own account, not acting as an agent or broker arranging services between its parent company and third parties.
* The Court drew support from precedents, particularly M/s. Ernst and Young Limited (Delhi High Court) and Genpact India Pvt. Ltd. (Punjab and Haryana High Court), which similarly held that an Indian entity providing direct services to an overseas entity is not an intermediary, especially when providing the main service on its own account.
* On Limitation:
* The Court relied on its own previous judgment in Charomotolab and Biotech Solutions vs. Union of India, which held that the date of online filing of a refund application (when an ARN is generated) is the relevant date for determining the limitation period under Section 54(1) of the CGST Act, not the subsequent physical submission of documents.
* As the online application was filed within the statutory period, the refund claims were deemed to be within limitation.

6. Statutory References
* Integrated Goods and Service Tax Act, 2017 (IGST Act, 2017):
* Section 2(6) - Definition of "export of services"
* Section 2(13) - Definition of "intermediary"
* Section 8, Explanation 1 - Distinct person
* Section 13(8)(b) - Place of supply of intermediary services
* Section 16 - Zero-rated supply
* Central Goods and Services Tax Act, 2017 (CGST Act, 2017):
* Section 54(1) - Refund of tax (limitation period)
* Section 110 - Appellate Tribunal
* Circulars:
* Circular No. 17/17/2017-GST dated 15th November 2017
* Circular No. 24/24/2017-GST dated 21st December 2017
* Circular No. 159/15/2021-GST dated 20th September 2021

7. Precedents Cited
* Charomotolab and Biotech Solutions vs. Union of India, 2022 (67) G.S.T.L. 160 (Guj.)
* Genpact India Pvt. Ltd. vs. Union of India and others, 2022 (11) TMI 743 (Punjab and Haryana High Court)
* M/s. Ohmi Industries Asia Private Limited vs. Assistant Commissioner, CGST, 2023 (4) TMI 425 (Delhi High Court)
* M/s. Ernst and Young Limited vs. Additional Commissioner, CGST Appeals-II, Delhi and another, 2023 (3) TMI 1117 (Delhi High Court)
* M/s Radhasoami Satsang Soami Bagh, Agra Versus Commissioner of Income Tax (1992) 1 SCC 659 (cited within the Genpact judgment for the principle of consistency in tax matters where facts remain unchanged).