The High Court · 2025

Counsel for the Resprcndent Nos. 1to3: SRI M. P. KASHYAP. SC FOR CENTRAL BORAD OF INDIRECT TAXES Counsel for the Respondent No.4: Dy. SOLICITOR GENERAT- OF INDIA The Court made the following: ORDER , -TI{Ii HoN'I'LE THE CIIIEF'JUSTICE SRI APART]SII KU]\IA[I SIN(;TI ANI) TIIE IION'BI,I' SRI JI]S1'ICE (;.i\I.NIOI{IUI)DIN WRIT PFITI'IION No. I l04l of 2021 OIIDE,R: Heard Mr. 'l-. Suryanarayana, learned Senior Counsel rcpresenting Ms. K. Srilatha, leamed counsel for the petitioner and N4r. M.P. Kashyap, learned Standing Counsel fbr the Centlal Board of'Inclirect Taxes and Customs for respondent Nos. I to 3 ). 'l'hc petitioner is engaged llt exporting ol' in fbrrnation tcchnology and support services to customers outsidc India during the period lrom July, 2021 lo liebruary, 2022 (refund period). 1he pctitioner claims to have made exporl of services undcr the "Zero- Rirted Strpply Mechanism" i.e., without charging output tax ()n e\ports, as provided in terms of Section 16 of the Integrated Goocls ancl Sen,ices Tar Act, 2017 (fbr shor1, "thc ICST Act"). '[ he lrctitioner contencls thal in te rms of Section I 6(3 ) ol the IGS'l Act rcad rvith Section 54 of the Central Goods and Services 'fax Act. I I 2t)17 (fbr short. "the CGST Act"), it was eligible to clairn relund o1' the unutilizcd input tax credit on supply of goods or scrvices or 2 'l both har,ing n'acle zero-rated sLrpply ol scrvices durinq that pcriod The petitioner Iurrher filed an application fbr refund of input tax credit vidc frorm GST-RFD-0l, dated 10.05.2022 and clairned relund of Rs..1,97,88,701/- on the tumover of zero-rated supply of scrvices ar.n ou nt i rrg to ll-s.3,65,90, 5 4,093 I -.

3. It is tl-,: contention ol the petitioner that it also lumishcd documcntary' cvidcncc suppo(ing its relund claim such as computation itaternent. input tax credit register', copies of expon invoiccs and r:on'esponding Foreign Inward Rernittance Certificates (F-lRCs) ctc. A shorv cause notice was issued on t)6.06.2022 in Form GS1 -RFD-08, by respondent No. 1 asking the petitioner to show causc er; to why relund claim should not be reiected as it had not fumished the documentary evidence regarding the country ol' incorporation o[' lbreign custolnel's and also certain reconciliation statcn-lents. 'fhc pctitioner Iurnishcd the requisilr: dt'tails vide submission dated 2l .06.2022. After considering the objections of the petitioner filcd in response to the show cause notice, the Refund Sanctioning Authority passed an order on 27 .06.7022 in fiorm GS-f-RIrD-0r, sanctioning a refund ol' Rs.2,92,6 /,2771-. Thc I I ., lindings of the Refund Sanctioning Authority are extracted hereunder: "ln light ol above details and the documents submitted by them clectronically. and thc othcr details available in the common portal, I find that:- a) the retund claim lor thc same period has not becn llled in the same category including any claim filed undcr 'An! Othcr' Categorl'. b) ol'time, as providcd under Acts, the ret-und claim has been filed within limitation c) pending lor reoovery from the them They filcd all the due retums and no dues are d) As provided under Section 54 (8), notu,ithstanding anything contained in sub-section (5), the rcf-undablc amount shall, instead of bcing credited to the ["und, be paid to the applicant, if such amount is relatablc to rclund of ta-x paid on expo( of goods or services or both or on inputs or input serviccs used in making such exports. Accordingly. thc provisions of unjust cnrichmcn( are r1o1 applicable to prescnt rclund application in ternrs ol'the provisions of section 54(8) ol thc CGST Act mcntioned above. e) ln tcnns ofsub-rule (3) olrule 89 of CGSTRules. rvherc the applicalion relates to refund of input tax credit. the electronic credit ledger shall be debitcd by ftc applicant by an amount equal to the refund so claimed. f'urthcr. the Application Ii"eference Number (ARN) will be gcncrated only afler the applicant has completed the process ol filing the rclirnd application in F'ORM GS'I IIFD-01. and has con.rpleted uploading of all thc supportiug documents/undertaking/statemcnts/invoices and. where required, the amount has been debitcd lrom the clectronic credit/cash ledger. Accordingly, the relund irrnount claimcd has been found dehited lrom the c lectronic credit ledgcr. 4 'l hey have not claimcd the rellnd of I fC on t) in', oices u hich are not reflectcd in FORM GSI R-2A. S) the refund is not barrcd under the prolisions of 2nrl and 3rd proviso to section 54(3) of thc CCST Act. 20 l7 inasmuch as thc goods exported out of India arc not sulrjectcd to c\port dut_'". and the supplier of g,oods or services or hoth has not availed the drau,back in respecl ol central tax or clairned relund of the irrtegrated tax paicl on such supplies."

4. lJpon zr.rthorization order of the Comrnissioner. Central Taxes ancl Clustorrs, dated 2l .122.022 in exercise ol'Powers vested under Section 107(2) of the CGST Act, the Dcputy (lomrnissioner of Central 1'ar: prelerred an appeal against the rcfund order dated

2.7 .06.2022 to tletcnlir.rc the tbIIon ing qucstions: "\tr'hc'lher thc order of the ltclirnd Sanctioning Authoritl, in sanctiorring relund of Rs.2.92.61 .2711- I. . with,-)ut proper detennination of "Tumover of Zero Ratcd SLrpply of scrvices" as stipulated in Rule 89(4)(D) of Central Goc,,ls and Services Tax Rulcs. 2017 and "Adjrrsted Total Turrover" as stipulated in Rulc 89(4)(E) ol Central Goods and Scn,iccs Tax Rules. 2017: and without proper vcrification of agreements to ascertain the nature ol'scrvices and Place of provision ol service as to *hcther thct' constitute "export of'scrvices" as per Section 2(6) olthe Integrated Goods & Services I'ax Act. 2017, \\ is lcgal and propcr'i "

5. 1-he departrnental appeal rvas decided by the irlpugned order dated 27.09..10r-1. Personal hearing u,as accorded b the petitioner., f, rvho reiterated its cross objections and requested to reject the appeal preferred by the deparlment. The appellate authority arrived at the lbllowing findings upon discussion on the case oithe parties; "Discussions and Findings:

14. I havc gonc through records ol'the casc, cross objections and submissions at the timc ofpersonal hearing in all the appcals mcntioncd above. li. Appcllant contended that Rel'und Sanctioning Authority rvithout exarpining the nature of scrvice. place ol provision of servicr: and without eramining the applicability of sub-soction (i) to (13) ol Section 13 of Integrated Goods & Services Tax Act. 2017. concluded that the place ol provision of service is outside ol- India and the supply of service is export.

16. Respondcnt has submittcd the agrecment copy with scrvice recipient arrd incorporation certificates of the respondent as rvell as scrvicc rccipient. ns secn lrom the incorporation cel'titlcatcs scrvice provider and recipient are not mere establishmcnts of distinct person. I{espondent has agreed to provide solirvare dcvelopment sen,ices. As per agreement orvnership and all other rights o1'the work product rests with the recipient ol the service.

17. From the above tcrms and conditions ol the agreemcnl il is cvidcnt that the respondent is providing software serviccs. Respondont is not working as intermediary. Services provided by thc respondent are not barrcd by any provisions of sub section (.1) to (13) of section 13 of the IGS'I ACT 2017 to qualify fbr export of sen,icc. Thus services provided by the respondent qualily lbr the export ol services as per the scction 2(6) of the IGST Act 2017.

18. Appcllant contended that [{elund Sanctioning Aulhority has not veritied the sanre by secking any ledger or document lioni thc tax paycr. which is nccessarily to be vcrified in terms of Rulc tl9(4)(D) ol Central Goods and Services 'l'ax Rules, 2017. As thc tlrrnovcr of zero rated supply of services is not detcrmincd in accordance with the provisions of Rule 89(4) (D) ol Central Coods and Serviccs Iar Rules. 2017, the Adjusted \ 6 'fotal Turrrover arrived, is also not in accordancc \\ith the provisions of Rule 89(4) (E) of Central Goods and Services Tax Rules,2017

19. As secn lrom the additional submissions dt. 20.()9.202i there is chadered accounlanl certificate issued by K Srinivas Murthy stirting that no advances have beeu reccived during the relevant pcriod of refund. And submitted lhat the turnover of zenr rateC supplies lor the refund period i.e. Juty 2021 to leb- 2022 is Rs 3,56,I 3.20,006/-. While refund sanctioning authority in Refund order stated that the turnover ofzero rated supplics for the re{'uld pcriod i.e. July 2021 to feb-2022 is Rs 3,65.90.5.1.093/-

20. l:ronr the above misniatclr it is cr"ident that the relund sanctioning authority has erred in calculating the turnovcr ol' zero rateil supply of services in as pcr the provisions of Rule 89(4)(l)) of Central Coods and Serviccs Tax Rulcs. 20[7. therefore Adjusted lbtal Turnover arrived, is, also not in accordancc with thc provisions ol Rule 89(4XIl) oI Ccntral Goods ar,l Sen,ices l'ax Rules. 201 7

21. In vieu of the above firrdings and discussion. i pass the follorvinp oldcr': I allow the appeal filed by the department setting asidc the order of original authority." Ordcr

6. Our att('ntion has been specifically drawn to the findings at paragraphs 16 and l7 olthe order olthe appellate authority where he has held lhat frorn the terrns and conditions o| the agreernent submitted b1 the respondent/petitioner herein rvirh the service recipient and incorporation ceftificates of the petitioner as rvell as service recipi,rnt, it is evident that petitioner and recipients itre not mere establis, ulents of distinct person. l-heretbre. the petitioner ) ) 7 ) has provided soltware services and it is not working as an intermediary. Services provided by the petitioner were not barred by any olthe provisions ofsub-sections (3) to (13) of Section l3 of the IGST Act to qualif, fbr exporl of service. Thus, services provided by the petitioner qualily for exporl of services as per Section 2(6) of the tGS'l-Act. l. Learned counsel lbr the petitioner submits that question No.2 liamed in the appeal r,',as accordingly ansrvered in favour of the petitioner. Frorn the lindings recorded at paragraph 19 of the impugned order, it is submitted that the appellate authority after considering the additional submissions dated 20.09.2023 and the chartered accountant cerlificate. observed that the turnover of zero- rated supplies lbr the refund pcriod i.e., July,202l to February, 2022 is Rs.3.56, 13,20,006/-. While the Refund Sanctioning Autlrority in refund order has cornputed it as Rs.3,65,90,54,093/-. It is submined that the pctitioner had submitted the requisite documents such as, tlie agreement and ledger before the appellate authority. The appellate authority f-ailed to appreciate that the 8 rnismatch in the turnover is not going to deny the claim ol relund .1 sought by the petitioner for the period in question.

8. Learned counsel for the petitioner has drawn the attention ol this Court to tle provisions ol Rule 89 in Chapter X ol the Central Goods and Selvices Tax Rules, 2017 (for short, "the ( GST Rules") under the heirding "Retund" rvhich deals rvith re lund of tax, interest, penatry. fees or any other amount. ['le has specitically rei'erred to sub-rule (4) thereof, whicli provides thc formula for rclund of inpr-t tax credit in case ol zcro-ratcd supplr ol'goods or services or bc,th without payment of tax under bonrl ol letter of undertakino irL accordancc rvith the provisions of Seition 16(3) ol the IGST Acr,. He has also referred to sub-clausc (f .) of sub-rule (4) of Rule 8''' of the CGST Rutcs which provides tbr computation of the "ad.iusred total turnover". It is subrnitted that the petitioner is only a sulrplier of zero-rated services and not goods. Thc appellate autriority therefore instead of dismissing the appeal after holding that the services provided by the petitioner qualifu lor export of ser,,ices in terms ol Section 2(6) ol the IGST Act ought to have exarnined the question of adrrissible quanlllrn of relund on 9 , the basis ofthe document sought fbr and supplied by the petitioner. On the basis oi the apparent mismatch in the zero-rated tumover supply for the refund period as sr,rbrr.ritted by the petitioner on the basis of the chartered accountant ccftificate with that computed by the Refund Sanctioning Authority it should not have denied the refund admissible to the petitioner in totality.

9. Learned counsel for the petitioner has drawn the attention of this Court to the Input Tax Credit (l'fC) eligible to the petitioner if the tumover of zero-rated service of supplies is treated as Rs.3,65,90,54,0931-, as computcd b1' the Relund Sanctioning Authority vis-d-vis Rs.3,56, 13,20,006/- as furnished by way of certificate of the chartered accountant. 'lhe said tabular chart is extracted hereunder: Particulars Reference I I 'fumover of zcro- rated supply ol' services I'urnover of' non zero-rated supply of services Adjusted turnover Nct ITC I l As per rel'und sanction order If lower tumover of zero-rated supply is considered as per the impugned order

3.6_i.90.54.093 l i.56,1 3,20.006 I I} C:N+B il.80.ltt.-t I I 52,80.r8.sil |

4.t8.70.72.604

4.08.93.38,517 t)

6.6i.1 4.61.5 6,6i,14.6 r 5 :: l0:: i E : Lower of c(i) or e(ii)

3.08,70,196

3.08.70.196 e( i)

5.79.51.888

5.77.5t.01l e II

3.08,70, r96 i.08.7().1()6

2.97.88.701

1.q7.88.701 Maximum ref-und admissible Refund - amount as pcr Rulc 89(4) - Ralancc in Electronic Creclit Lcd EI Rcliurd Claimed' that could har'<: hecn clainred

10. Based ,:n these submissions, leamed counsel lor the petitioner has prayed for remand of the matter to the appellate authority to determine the quanturn of refund, if any. admissible to the petitioner. ll. I-earnerl counsel for respondent Nos.l to J subrnits on instructions ttral on this issue if the Court remands lhe nta er. the appellatc autL,ority would detenxine the issue of quantum of refund due to the pelitioner in lieu of the export of service rLndertakcr-r b1, it lor the periotl lrom July, 2021 to February, 2021. I t:arned counsel \ I lor respondcnt Nos.1 to 3 does not dispute that the appellate authority heL; rendered the finding that the petitioner is providing soltware selvices and is not working as an interrrediarl and as such qualifi,-'s for export of services as per Section l(6) of rhe IGST ::ll:: Act. lt is only a question of computation ol the amount of refund based upon the adjusted total turnovcr to be determined in terms of Rule 89(a)(D) and (E) ol-the CCSI- Rulcs

12. Upon consideration of the submissions of the leamed counsel for the parties and the n'raterial relerred to from the pleadings on record and after perusal of the impugned appellate order, we are o1' the considered view that since the appellate authority had in answer to question No.2 recorded a tinding that the petitioner was qualified fbr export ol service and was not working as an intermediary, it should have upon the subnrission of thc relevant docurnents, such as agreements and lcdger etc., by the petilioner, proceeded to determine the total lurnover of zero-rated supply of service under Rr"rle 89(lXD) ol the CGST and the adjusted total turnover under Rr"rle 89(4)(E) of tl.re said Rules. The appellate authority after having taken note of a mismatch in the turnover of zero-rated supplies lbr the subject period between the L certificate of the chartered accountant submitted by the petitioner vis-ir-vis the turnover of zero-rated sr-rpply computed by the Refund Sanctioning Authority should l-rave colre to a linding as to whethcr' '-1 i:12tl cven after tl-rc vrrriation in the mismatch of the turnovcr o1-the zero- rated supplies rvhether the petitioner is entitled to seck rclund of' any arnount or not. The appellate authority having failcd to trndcrtake this :xercise, as required under the law, corntnitted an errol in allouing the appeal without determining the question as to rvhether the pe:ritioner is entitled to relund of any anrount for thc subject pcriocl rgainst its claim of havirrg made zero-r'ated suppll' of' scrvicc. after due scrutiny of the relevant recr,r'ds such as agreclnent. le<lger etc., which the petitioner claims to ha",c- subnrittcd bc li-, c him. fhe appellate authority under tlre provisions ol Section l 0'z of the CGST Act does not havc the pou c.r to rernand tlrc nratter to the assessing authority to undenakc that e\efclse Tlrc"efbre, it was incumbent upon the appel late autholitv to undeltakc -he said exercise and deterrnine the quantu rn o l- relund. il anv. adrnissible to the petitioner or not. -l'irerefore, rratter is remi':ed back to the appellate authority to decide the issuc of dcterminlrtion of the quantum of refund, ilany. adnrissible to the petitioner fbr. the subject period i.e., from luly,202l to Februarv, \ :: l3:: ! 2022 on the basis of' its clairn that it had undertaken zero-rated supply of services during that period.

13. The impugned order is, accordingiy, set aside to the extent of the error indicated hereinabove. Upon rernand, the petitioner, il'so callcd upon, shall cooperate in determination of such claim. lt is expected that the appellate authority would take a decision rvithin a rcasonable time, preferably, within a period ol eight weeks lrour the date of receipt of a copy of this order

14. Accordingly, the writ petition is allowed. No costs. Miscellaneotrs petitions, pending il any, stand closed SD/. K.BHAVANI SWAMY S STANT REGISTRAR //TRUE COPY// ECTION OFFICER To,

1. The Deputy Commissioner of Central Tax, Gachibowli Division, Rangareddy GST Comm issionerate, Hyderabad, Telangana Stadium Road, Basheer Bagh, Hyderabad. Telangana - 500 004 Posnett Bhavan, Ramkote, Tilak Road, Abids, Hyderabad - 500 001

2. The Commissioner of Central Tax, Rangareddy GST Commissionerate, 3. The Additional Commissioner (Appeals - l), 7th Floor, GST Bhavan, LB 4. The Secretary, Union of lndia, Department of Revenue, Ministry of Finance, 5 One CC to t\lls. K. SRILATHA, Advocate [OPUC] 6. One CC to SRl. M. P. KASHYAP, SC FOR CENTRAL BOARD OF INDIRECT 7. One CC to Dy. SOLICITOR GENERAL OF INDIA [OPUC] B. Two CD Copies Government of lndia, North Block, New Delhi - 110 001 TAXES [OPUC] BIM TKS HIGH COURT DATED:26108112025 ORDER WP.No.11041 of 2024 ,J.. idE S14 l'e ,, l, 0 4 fi0\J 2u5 Sor lgrt( ALLOWING ]-HE WRIT PETITION WITHOUT COSTS \o \l L