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.

  • The services were rendered under an Amended Support Service Agreement dated 06.06.2015.
  • The Petitioner provided services such as:
    • Market research and updates
    • Identification of investment opportunities in India
    • Financial feasibility analysis
    • Due diligence and advisory support

Under the pre-GST regime, these services were treated as export of services, and refunds were granted.

However, under GST:

  • Refund of unutilized Input Tax Credit (ITC) for FY 2018–19, 2019–20, and 2020–21 was rejected.
  • Authorities held that:
    • Services were not export of services
    • Petitioner acted as an intermediary
    • 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 qualifies as an “intermediary” under Section 2(13) of the IGST Act.
  3. Whether the place of supply falls within India under:
    • Section 13(3)(b)
    • Section 13(4)
    • Section 13(8)(b) of the IGST Act.
  4. Whether rejection of refund claims was legally sustainable.

Petitioner’s Arguments

  • The Petitioner contended that:
    • It provided independent advisory services on a principal-to-principal basis.
    • It did not facilitate or arrange any supply between two parties.
    • The recipient of services was located outside India, hence:
      • Place of supply = Location of recipient (Section 13(2))
    • Therefore, services qualify as export of services.
  • It emphasized:
    • No authority to negotiate or conclude contracts on behalf of the foreign entity.
    • Services were purely consultative and analytical.

Respondent’s Arguments

The Revenue argued that:

  • The Petitioner:
    • Acted as a liaison or facilitator
    • Identified opportunities and connected investments in India
  • Therefore:
    • It qualifies as an “intermediary”
    • Place of supply is India (Section 13(8)(b))

Additionally, authorities claimed:

  • Services were related to immovable property (roads, tolls) → Section 13(4)
  • Services required physical presence → Section 13(3)(b)

They also sought remand for fresh adjudication.

Court’s Findings / Order

The Delhi High Court allowed the petitions and held:

1. Not an Intermediary

  • Intermediary requires:
    • Three parties
    • Facilitation of supply between others
  • In this case:
    • Only two parties (Petitioner & overseas entity)
    • Petitioner provided services on its own account

Therefore, not an intermediary under Section 2(13).

2. Place of Supply Not in India

Section 13(3)(b) – Not Applicable

  • Applies to services requiring physical presence
  • Advisory services do not fall under this category

Section 13(4) – Not Applicable

  • Applies to services directly related to immovable property
  • Advisory services are not directly linked to property

Section 13(8)(b) – Not Applicable

  • Since Petitioner is not an intermediary

3. Export of Services Established

All conditions under Section 2(6) of IGST Act satisfied:

  • Supplier in India
  • Recipient outside India
  • Payment in foreign exchange
  • Place of supply outside India

Hence, services qualify as export of services

4. Orders Set Aside

  • Impugned orders quashed
  • Refund claims to be processed within 8 weeks

Important Clarification

  • Advisory / consultancy services provided on principal-to-principal basis are NOT intermediary services.
  • Merely:
    • Identifying opportunities
    • Providing reports
    • Supporting investment decisions

Does NOT amount to facilitation or intermediary role.

  • Also clarified:
    • Authorities cannot go beyond show cause notice grounds
    • Misapplication of Sections 13(3) & 13(4) is invalid

Sections Involved

  • Section 2(6), IGST Act, 2017 – Export of Services
  • Section 2(13), IGST Act, 2017 – Intermediary
  • Section 13(2), IGST Act – General rule (place of supply)
  • Section 13(3)(b), IGST Act
  • Section 13(4), IGST Act
  • Section 13(8)(b), IGST Act
  • Section 54, CGST Act, 2017 – Refund of ITC

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

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