Delhi High Court: In a case wherein petitioner filed a petition impugning a common order dated 31-08-2022 passed by Respondent 2, the Appellate Authority dismissing the appeals preferred by the petitioner under Section 107 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) against orders passed by the Adjudicating Authority, the Division Bench of Vibhu Bakhru* and Amit Mahajan, JJ., held that the period between 01-03-2020 and 28-02-2022 was required to be excluded for the purpose of limitation for refund claims in terms of the GST Notification 13/2022-Central Tax dated 05-07-2022 and therefore, the claims could not be said to be time barred. Further, the Court directed the respondents to refund the amounts as claimed by petitioner.
Petitioner holds a telecommunication license from Government of India and was engaged in providing telecommunication services including services in International Inbound Roaming Services (‘IIR’) and International Long-Distance Services (‘ILD’) to inbound subscribers of Foreign Telecom Operators (‘FTOs’). Petitioner had entered into various service agreements (International Roaming Agreements) with FTOs for providing IIR and ILD services and the consideration for providing IIR and ILD services to subscribers of FTOs during their visit to India, was paid by FTOs to petitioner. Petitioner filed its applications for refund of Integrated Goods and Services Tax (‘IGST’) claiming that it had exported services and paid integrated tax as provided under Section 16(3) of the IGST Act, 2017 (‘IGST Act’).
The Adjudicating Authority did not accept the refund claims made by the petitioner and rejected the same, essentially, on three grounds, first, that the refund application filed by petitioner was time barred in view of Clause (c) of Explanation (2) of Section 54 of the CGST Act, second, that the supply of services was in India and the supply of services could not be treated as ‘export of services’ as “the recipient of service i.e., Inbound Roamers were physically present in India and services were consumed in India by the Inbound Roamers” and third that “the service provider was bound by the provisions of Indian Telegraph Act, 1885 and it could not provide service to FTO as the FTO was situated in foreign land and the Indian Telecom Operator was not licenced to render service to FTO under the Indian Telegraph Act, 1885”.
Petitioner appealed against the orders passed by the Adjudicating Authority before the Appellate Authority by filing appeals under Section 107 of the CGST Act, but the said appeals were rejected by the impugned order.
Analysis, Law, and Decision
The Court noted that petitioner’s refund claims were rejected on the ground that petitioner had received payments for part of the services rendered prior to issuance of the invoices and therefore, claims in respect of invoices issued more than two years prior to the date of the applications were barred by limitation. The Court observed that in terms of Section 54(1) of the CGST Act, a claim for refund might be made within a period of two years from the relevant date and the term ‘relevant date’ was defined under Explanation (2) to Section 54 of the CGST Act.
The Court opined that the date on which petitioner had received payments from FTOs would be the relevant date for the purpose limitation under Section 54(1) of the CGST Act. The Court noted that the authorities had rejected the claim by mentioning that payments in respect of some of the invoices were received by petitioner in advance. The Court observed that there was no specific reference to the invoices in respect of which payments were held to have been received in advance, that is, prior to the date of their issuance and the Court opined that the respondents had also not referred to any particular instance where payments in respect of any invoices were received prior to the date of invoices. Thus, the Court further opined that in case the payments were received after the invoices were raised, the date of receipt of payments would be relevant for the purposes of computing the limitation for filing claims for refund.
The Court stated that whether the petitioner had made the claims within the period of limitation was no longer a contentious issue as after the impugned order was rendered, the Central Board of Indirect Taxes and Customs (‘CBIC’) had issued a notification (GST Notification 13/2022-Central Tax dated 05-07-2022) relaxing the period of limitation for filing a claim for refund under Section 54(1) of the CGST Act. Thus, the Court held that in terms of the said GST Notification, the period commencing from 01-03-2020 to 28-02-2022 was required to be excluded for computing the period of limitation.
The second issue for consideration before this Court was “whether the telecom services provided by petitioner to inbound subscribers of FTOs constituted ‘export of services’ within the meaning of Section 2(6) of the IGST Act?”.
The Court stated that the issue was covered by Verizon Communication India Pvt. Ltd. v. Assistant Commissioner of Service Tax, Delhi III, 2017 SCC OnLine Del 10299 (‘Verizon Communication Case’), and opined that the provisions for ascertaining the place of supply of services under Rule 6A of the Service Tax Rules, 1994 (‘ST Rules’) were similar to Section 2(6) of the IGST Act inasmuch as the services would be treated as export of services when (a) the provider of service was located in the taxable territory, (b) the recipient of the service was located outside India, and (c)the place of provision of the service was outside India. The Court further opined that the Customs Excise and Service Tax Appellate Tribunal had in several cases followed the decision in Verizon Communication Case (supra) and allowed the appeals preferred by petitioner and directed the refund.
Thus, the Court allowed the petition and directed the respondents to refund the amounts as claimed by petitioner.
[Vodafone Idea Ltd. v. Union of India, 2023 SCC OnLine Del 6673, decided on 09-10-2023]
*Judgment authored by: Justice Vibhu Bakhru
Advocates who appeared in this case :
For the Petitioner: Vanita Bhargava, Shantanu Chaturvedi, Advocates
For the Respondents: Akshay Amritanshu, SSC; Ashutosh Jain, Samyak Jain, Advocates