LI Network
Published on: October 25, 2023 at 15:15 IST
The Delhi High Court has issued a directive to the department for the refund of Integrated Goods and Service Tax (IGST) on telecommunication services offered by Vodafone Idea to foreign telecom operators (FTOs).
In a case presided over by Justice Vibhu Bakhru and Justice Amit Mahajan, it was noted that the predecessor of the petitioner (Vodafone India Ltd.) had previously succeeded before the Customs Excise and Service Tax Appellate Tribunal regarding whether the services qualified as export services.
The petitioner, or assessee, was dissatisfied with the rejection of its claims for IGST refund concerning telecommunication services provided to FTOs under agreements.
The rejection of the refund claims was based on two main grounds. First, it was argued that the services provided did not meet the criteria for export of services. Second, the claims were considered time-barred as they were filed beyond the stipulated two-year period from the relevant dates.
The petitioner contended that the connectivity services provided to inbound subscribers of FTOs qualified as export of services since they were rendered to entities located outside India, the FTOs.
The petitioner also claimed that the refund claims were filed within the prescribed time frame, as payments were received after the date of invoices, and the claims were made within two years of receiving remittances for the services.
The central issue at hand was whether the telecom services provided to inbound subscribers of FTOs constituted the export of services and whether the claims were made within the specified limitation period under Section 54(1) of the CGST Act.
The assessee argued that since FTOs were the recipients of the services and they were situated outside India, the place of service should be considered outside India, in accordance with Section 13 of the IGST Act.
The department, on the other hand, contended that the place of service was within India as the recipients of the services were subscribers of FTOs, and their presence in India was necessary to avail the services.
The court observed that payments were received by the petitioner after the invoices were issued, making the date of payment receipt the relevant date for the purpose of the limitation under Section 54(1) of the CGST Act.
The court also noted that the provisions for determining the place of service under Rule 6A of the ST Rules were similar to Section 2(6) of the IGST Act, with services being treated as exports when the provider is in the taxable territory, the recipient is located outside India, and the place of service provision is outside India. Decisions regarding the export of services in the context of Rule 3 of the Export of Services Rules, 2005, were applicable to the current issue.