Facts of the Case

The Petitioner, M/s Cube Highways and Transportation Assets Advisor Pvt. Ltd., is engaged in providing investment advisory and support services to its overseas group entity, I Squared Asia Advisors Pte. Ltd., Singapore, under a Support Services Agreement.

The services included market research, identifying investment opportunities in India, financial analysis, due diligence, and advisory support for investments in the transportation sector.

Under the pre-GST regime, such services were treated as export of services, and refunds of input tax credit (ITC) were granted. However, under GST, the Petitioner’s refund claims for unutilized ITC for FY 2018–19, 2019–20, and 2020–21 were rejected by the authorities on the ground that:

  • The services did not qualify as export of services, and
  • The place of supply was in India.

Issues Involved

  1. Whether the services rendered by the Petitioner qualify as “export of services” under Section 2(6) of the IGST Act, 2017.
  2. Whether the Petitioner is an “intermediary” under Section 2(13) of the IGST Act.
  3. Whether the place of supply is in India under:
    • Section 13(8)(b) – Intermediary services
    • Section 13(3)(b) – Services requiring physical presence
    • Section 13(4) – Services relating to immovable property
  4. Whether denial of ITC refund under Section 54 of the CGST Act, 2017 is justified.

Petitioner’s Arguments

  • The Petitioner contended that it provides independent advisory services on a principal-to-principal basis, not as an intermediary.
  • The overseas entity (I Squared) independently decides on investments; the Petitioner has no authority to conclude contracts or represent the foreign entity.
  • The services are supplied directly to a foreign recipient; therefore, under Section 13(2) of IGST Act, the place of supply is outside India.
  • There are only two parties involved (service provider and recipient), hence intermediary provisions are inapplicable.
  • Services were already treated as exports in the pre-GST regime, and there is no material change in nature.

Respondent’s Arguments

  • The authorities argued that the Petitioner acts as an intermediary facilitating investments in India for the foreign entity.
  • It was claimed that the Petitioner provides services to customers or investment opportunities in India on behalf of the foreign entity.
  • The services were also alleged to:
    • Require physical presence in India (Section 13(3)(b)), and
    • Relate to immovable property such as roads and toll projects (Section 13(4)).
  • Therefore, the place of supply was in India, making the services non-export.

Court’s Findings / Order

The Delhi High Court allowed the petitions and set aside the impugned orders, holding:

1. Not an Intermediary

  • The Petitioner provides services on its own account, not as a facilitator.
  • Intermediary requires three parties, which is absent here.
  • Advisory services do not constitute intermediary services.

2. Section 13(3)(b) Not Applicable

  • Applies only to services requiring physical presence of an individual, which is not the case here.

3. Section 13(4) Not Applicable

  • Services were not directly related to immovable property, but were advisory in nature.

4. Export of Services Established

  • Conditions under Section 2(6) of IGST Act satisfied:
    • Supplier in India
    • Recipient outside India
    • Consideration in foreign exchange
    • Place of supply outside India

5. Orders Beyond Show Cause Notice Invalid

  • Authorities introduced new grounds not mentioned in SCN, which is legally impermissible.

Final Direction

  • Refund claims to be processed within 8 weeks.

Important Clarifications

  • Advisory/consultancy services rendered independently cannot be treated as intermediary services.
  • Mere assistance in identifying business opportunities does not amount to facilitation of supply.
  • For intermediary classification, existence of three parties is essential.
  • Services must be directly linked to immovable property to invoke Section 13(4).
  • Authorities cannot travel beyond show cause notice while passing orders. 

Sections Involved

  • Section 2(6), IGST Act – Export of Services
  • Section 2(13), IGST Act – Intermediary
  • Section 13(2), 13(3)(b), 13(4), 13(8)(b), IGST Act – Place of Supply
  • Section 54, CGST Act – Refund of ITC

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB17082023CW144272022_120321.pdf

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