Facts of the Case

The Petitioner, Cable and Wireless Global India Private Limited, is a company registered under the Central Goods and Services Tax Act, 2017, having its registered office in Karnataka and branch offices in Delhi and Maharashtra.

The Petitioner entered into an Inter-Company Agreement dated 16 August 2018 with Vodafone Group Services Limited (VGSL) for providing Business Support Services. The services were rendered through its Delhi Branch Office, which raised invoices reflecting its GST registration and address.

During Financial Year 2019–20, the Petitioner exported services and accumulated unutilized Input Tax Credit (ITC) amounting to INR 47,33,053/-. Accordingly, it filed a refund claim.

However, the refund was denied through an Order-in-Original dated 29 June 2021, which was subsequently upheld by an Order-in-Appeal dated 07 June 2022. The denial was primarily based on the fact that the payment for services was received in the Bangalore bank account instead of the Delhi Branch Office account. 

Issues Involved

  1. Whether refund of unutilized ITC can be denied merely because export proceeds were received in a bank account of a different branch office.
  2. Whether receipt of payment in a different bank account affects the qualification of services as “export of services” under GST law.
  3. Whether separate GST registrations of branch offices (distinct persons) impact eligibility for refund.

Petitioner’s Arguments

  • The services were undisputedly exported from the Delhi Branch Office.
  • All statutory conditions for “export of services” under Section 2(6) of the IGST Act were satisfied.
  • The remittance being received in the Bangalore account does not alter the identity of the supplier.
  • The bank account used is irrelevant as long as payment is received by the entity.
  • The objection raised by the department is hyper-technical and not supported by statutory provisions. 

Respondent’s Arguments

  • Under Section 2(6) of the IGST Act, payment must be received by the “supplier of services.”
  • Since payment was received in the Bangalore office account, the Delhi Branch Office cannot claim refund.
  • As per Section 25(4) and (5) of the CGST Act, different registrations are treated as distinct persons.
  • Therefore, receipt of payment by a different registered entity disentitles the petitioner from claiming refund.

Court Findings / Order

The Delhi High Court allowed the writ petition and held:

  • Export of services by the Petitioner was undisputed.
  • The only objection regarding receipt of payment in a different bank account is overly technical and unsustainable.
  • Section 2(6)(iv) of the IGST Act does not mandate receipt of payment in a specific bank account.
  • The location of the supplier is determined based on the place of business providing the service, not the bank account receiving payment.
  • The Delhi Branch Office remains the supplier of services irrespective of where the payment is credited.
  • Provisions of Section 25 CGST Act regarding distinct persons do not override the fundamental nature of supply in this context.

Final Order

  • The impugned Order-in-Appeal dated 07 June 2022 and Order-in-Original dated 29 June 2021 were quashed.
  • The refund claim was directed to be processed expeditiously. 

Important Clarifications by the Court

  • Receipt of export proceeds in a different bank account does not invalidate export of services.
  • The GST law emphasizes substance over procedural technicalities.
  • The “supplier” is determined based on actual supply of service, not banking arrangements.
  • Branch registrations as distinct persons do not negate the factual matrix of service export. 

Sections Involved

  • Section 2(6), Integrated Goods and Services Tax Act, 2017 – Definition of “Export of Services”
  • Section 2(15), IGST Act – Location of Supplier of Services
  • Section 2(71), CGST Act – Location of Supplier
  • Section 25, CGST Act – Registration and Distinct Persons

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/YVA26092024CW147642022_164256.pdf

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