M/S. Columbia Sports Wear India ... vs Additional Commissioner Of Central Tax on 26 April, 2025

1. Outcome
The Karnataka High Court partly allowed all four writ petitions (W.P.No.12116/2024, W.P.No.3486/2020, W.P.No.3376/2023, and W.P.No.3420/2023).
Specifically, the Court:
* Quashed the impugned orders (Order-in-Originals and Orders-in-Appeal) that rejected the petitioner's refund claims for Input Tax Credit (ITC) under GST/Service Tax regime on the ground that the services were 'intermediary services'.
* Held that the services provided by the petitioner do not fall under the definition of 'intermediary services' and qualify as 'export of services'.
* Set aside the impugned orders that rejected refund claims on the ground of limitation.
* Held that the petitioner's refund claims were not barred by limitation, citing CBIC Notification No. 13/2022-Central Tax.
* Directed the respondents to grant/pay the refund to the petitioner along with interest under Section 56 of the CGST Act, 2017, within three months.
* Quashed the impugned Order-in-Original in W.P.No.3486/2020 confirming service tax demand, interest, and penalty, and all subsequent proceedings.
* Left open for adjudication other contentions and issues (including constitutional validity of certain provisions/circulars, which were not argued) by appropriate authorities, bearing in mind Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST.

2. Core Issue
The core issue was whether the "Buying Support Services" provided by M/s. Columbia Sportswear India Sourcing Pvt. Ltd. (the petitioner) to its foreign client, Columbia Sportswear Company, USA, constitute 'intermediary services' under Section 2(13) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) and erstwhile Service Tax provisions, or qualify as 'export of services' under Section 2(6) of the IGST Act, thereby determining the petitioner's eligibility for refund of unutilized Input Tax Credit (ITC) and the validity of service tax demands. A subsidiary issue was whether the refund claims were time-barred.

3. Key Facts
* Petitioner: M/s. Columbia Sportswear India Sourcing Pvt. Ltd., an Indian company engaged in exporting services.
* Service Recipient: Columbia Sportswear Company, USA, a foreign corporation.
* Nature of Services (per "Buying Support Services Agreements"): The petitioner assists the foreign recipient in sourcing and purchasing manufactured products. This includes:
* Identifying potential sources/suppliers.
* Ensuring products meet recipient's requirements (type, quality, delivery, financing, insurance).
* Coordinating communication between the recipient and suppliers.
* Surveying markets, identifying factories, visiting factories.
* Monitoring production, tracking shipments.
* Providing documentation support.
* Key Contractual Clauses:
* The petitioner does not have authority to represent and bind the recipient vis-à-vis manufacturers.
* The recipient places purchase orders directly on manufacturers.
* The relationship is one of an independent contractor, explicitly stating no principal-agent or employer-employee relationship is created.
* Compensation is a service fee based on operating cost plus a markup, not a commission on sales.
* Dispute: Revenue characterized the services as 'intermediary services', making the place of supply in India per Section 13(8)(b) of IGST Act, thereby denying them 'export of services' status and rejecting ITC refund claims (or demanding service tax under prior regime). Refund rejections were also based on limitation.

4. Arguments (Taxpayer vs Revenue)

• Taxpayer (M/s. Columbia Sportswear India Sourcing Pvt. Ltd.):

  • The services provided are "export of services" under Section 2(6) of the IGST Act, as all conditions (supplier in India, recipient outside India, place of supply outside India, payment in foreign exchange, not merely establishments of a distinct person) are met.
  • The petitioner is an independent service provider, not an 'intermediary', because it renders services on its own account, directly to the foreign client, without acting as an agent or facilitating a supply between two other principals.
  • There is no "triangular relationship" required for intermediary services, as the petitioner directly performs the main service.
  • The contract expressly negates an agency relationship and bars the petitioner from binding the foreign client with third parties.
  • Relied heavily on CBIC Circular No. 159/15/2021-GST, which clarifies the conditions for intermediary services and explicitly excludes sub-contracting from its scope.
  • Citing various High Court and CESTAT judgments (including Amazon, Genpact, Singtel, Xilinx, Ernst & Young, Ohmi Industries, Boks Business, Nokia), argued that similar services were consistently held not to be intermediary services.
  • Refund claims were not time-barred, as CBIC Notification No. 13/2022-Central Tax dated 05.07.2022 extended the period of limitation for refund applications during the COVID-19 pandemic (01.03.2020 to 28.02.2022).

• Revenue (Additional Commissioner, Union of India, CBIC):

  • The services are 'intermediary services' as defined in Section 2(13) of the IGST Act, as the petitioner "arranges or facilitates" supply of goods between the foreign company and manufacturers in India.
  • Therefore, as per Section 13(8)(b) of the IGST Act, the place of supply is the location of the service provider (India).
  • Consequently, the services do not qualify as 'export of services', rendering the petitioner ineligible for ITC refund.
  • The refund claims were barred by limitation as per Section 54 of the CGST Act.

5. Court’s Reasoning
The Court analyzed the contractual agreement and applied the definition of "intermediary" from Section 2(13) of the IGST Act, read with CBIC Circular No. 159/15/2021-GST and other recent judgments.

• On 'Intermediary Services':

  • The Court found that the agreement clearly establishes a principal-to-principal relationship where the petitioner provides services directly to the foreign client on its "own account."
  • The petitioner's role is to perform specific tasks (market survey, supplier identification, quality monitoring, etc.) for the foreign client, not to "arrange or facilitate" a supply between the foreign client and a third party in an agency capacity.
  • The contractual clause explicitly denying agency and restricting the petitioner's authority to bind the foreign client was crucial.
  • Applying the five pre-requisites for intermediary services from Circular No. 159/15/2021-GST (minimum three parties, two distinct supplies, agent/broker character, not on own account, sub-contracting exclusion), the Court concluded these were not met. There were only two parties involved (petitioner and foreign client) for the main service provided by the petitioner.
  • The Court extensively relied on and reiterated the reasoning from various High Court and Supreme Court precedents (e.g., Amazon Development Centre India Pvt. Ltd., Genpact India (P) Ltd., Blackberry India Pvt.Ltd, Singtel Global India Pvt.Ltd., Ernst and Young Limited, Bharati Cellular Ltd), which consistently held that similar business support services, software development, or advisory services rendered by Indian entities to foreign principals on a principal-to-principal basis are not 'intermediary services'. These judgments emphasized the absence of an agency relationship where the Indian entity acts on behalf of the principal to create legal relations with third parties.
  • The Court noted that even if the Indian entity interacts with third parties, if it performs the main service itself and is compensated on a cost-plus basis (rather than commission on third-party transactions), it acts as a principal, not an intermediary.

• On Limitation:

  • The Court found that the respondents failed to consider CBIC Notification No. 13/2022-Central Tax dated 05.07.2022, which specifically excludes the period from 01.03.2020 to 28.02.2022 for computing the limitation period for filing refund applications under Section 54 or 55 of the CGST Act.
  • Based on the provided chart, the refund applications, after accounting for this extended period, were within the prescribed time limits.

• On Constitutional Validity of Provisions/Circulars:

  • The Court expressly stated that the petitioner's counsel did not argue the constitutional validity of Section 8 of the IGST Act, Section 13(8)(b) of the IGST Act, Rule 36(4) and Rule 89(4) of the CGST Rules, or Circular No. 159/15/2021 and Circular No. 135/05/2020-GST. Therefore, these issues were left open for future consideration.

6. Statutory References
* Central Goods and Services Tax Act, 2017 (CGST Act):
* Section 2(5) (Definition of 'agent')
* Section 54 (Refund of tax)
* Section 56 (Interest on delayed refunds)
* Section 73 (Determination of tax not paid or short paid or erroneously refunded)
* Section 168(1) (Power to issue instructions or directions)
* Section 168A (Power to extend time limits in special circumstances)
* Section 174 (Repeal and saving)
* Rule 36(4) of CGST Rules, 2017
* Rule 89(4) of CGST Rules, 2017
* Integrated Goods and Services Tax Act, 2017 (IGST Act):
* Section 2(6) (Definition of 'export of services')
* Section 2(13) (Definition of 'intermediary')
* Section 8 (Intra-State supply) - Explanation 1
* Section 13 (Place of supply of services where location of supplier or recipient is outside India), specifically 13(3)(a), 13(4), 13(8)(b)
* Finance Act, 1994 (Service Tax Regime):
* Section 65(105)(zzb)
* Section 73
* Section 83
* Place of Provision of Services Rules, 2012:
* Rule 2(f) (Definition of 'intermediary')
* Export of Services Rules, 2005:
* Rule 3(1)
* Indian Contract Act, 1872:
* Sections 182-191, 222 (Pertaining to Agent and Principal)
* Constitution of India:
* Articles 14, 19, 226, 227, 265
* Other Acts:
* Companies Act, 1956/2013
* Foreign Exchange Management Act, 1999
* Reserve Bank of India Act, 1934 (Sections 45A, 45-I)
* United Nations (Privileges and Immunities) Act, 1947

7. Precedents Cited
1. M/s.Amazon Development Centre India Pvt. Ltd. vs. Additional Commissioner of Central Tax & Another, W.P.No.13007/2024 (Karnataka High Court, 17.09.2024)
2. Genpact India (P) Ltd. v. Union of India, 2023 G.S.T.L.3 (P&H)
3. Genpact India (P) Ltc., vs. Prl.Commissioner (GST), 2023 SCC OnLine P & H 7161
4. Blackberry India Pvt.Ltd v. Pr. Commissioner, Central Excise & CGST-Delhi South, 2022 VIL-921-CESTAT-DEL-ST (affirmed in 2023-VIL-441-DEL-ST)
5. Chevron Philips Chemicals Ltd. V. Pr. Commissioner, Central Tax & Central excise, Navi Mumbai, 2022 (12) TMI 1489-CESTAT Mumbai (affirmed in 2024 (2) TMI 21- SC ORDER)
6. Commissioner of Central Tax. v. M/s Singtel Global India Pvt.Ltd., 2023- VIL-606-DEL-ST
7. SNQS International Socks Pvt.Ltd. v. Commissioner of G.S.T. & CE, 2023-VIL-1219-CESTAT-CHE-ST (affirmed in 2024 (3) TMI 1045-SC ORDER)
8. Vodafone Idea Ltd. v. Union of India, 2022 (66) G.S.T.L. 63 (Bom)
9. M/s. Cube Highways and Transportation Assets Advisor Private Limited. Assistant Commissioner CGST Division & Ors., 2023-VIL-547 DEL
10. Boks Business Services Pvt Ltd., v. Commissioner of Central Goods and Services Tax Delhi South and Anr., 2023-VIL-579-DEL
11. Xilinx India Technology Services Pvt. Ltd., v. The Special Commissioner Zone VII & Anr., 2023-VIL-190-DEL
12. M/s.Ernst and Young Limited vs.Additional Commissioner, CGST, Appeals-II, Delhi and Anr, 2023-VIL-190-DEL
13. Ohmi Industries Asia Pvt.Ltd., v. Asst. Commissioner of GST, 2023-VIL-224-DEL
14. Commissioner of GST, Gurgaon II vs. Orange Business Solutions Pvt.Ltd., 2019(27) G.S.T.L. 523 (Tri-Chan.)
15. Evalueserve.com Pvt. Ltd. Vs. CST, Gurgaon, 2019(365) E.L.T. 546 (Tri- Chan)
16. Macquarie Global Services Pvt.Ltd v. CCE & ST, Gurgaon, 2021-TIOL-790-CESTAT-CHD
17. Bacha F. Guzdar v. Commissioner of Income-Tax, AIR 1955 SC 74
18. M/s.Nokia Solutions and Networks India Pvt. Ltd., vs. The Principal Commissioner of Central Tax & Anr., W.P.No.14827/2022 (Karnataka High Court, 22.08.2024)
19. Bharati Cellular Ltd vs ACIT, (2024) 160 taxmann.com 12 (SC)
20. Bhopal Sugar Industries Ltd. v. Sales Tax Officer, [1977] 3 SCC 147
21. Union of India vs. Future Gaming Solutions Pvt.Ltd, 2025 (2) TMI 483
(Additional citations in quoted text from precedents were also effectively cited by reference.)