06/04/2026
*Assessee’s refund for July 2024 was rejected by treating support services to overseas group entities as “intermediary services”, but the Bombay High Court set aside the order and remanded the matter for fresh decision after proper examination of the agreements and law.*
*Issue:*
Whether the services supplied by the Assessee to its overseas group companies were in the nature of *“intermediary services”* under the IGST law, and therefore not “export of services”, or whether the refund rejection order was liable to be set aside for non-consideration of the Assessee’s case and lack of proper examination.
*Rule:*
For deciding whether a supply is an “export of services” or falls within the scope of “intermediary services”, the authority is required to examine the real nature of the contractual arrangement, the role performed by the supplier, and the applicability of Sec. 13(8) of the IGST Act. An order rejecting refund under Sec. 54 cannot stand if it is passed without due consideration of the Assessee’s agreements, submissions, and the binding principles flowing from earlier judgments and CBIC clarifications. A reasoned order, consistent with principles of natural justice, is necessary.
*Application:*
The Assessee had contended that it rendered administrative and sales support services to overseas group entities on a principal-to-principal basis, for cost-plus consideration received in convertible foreign exchange, and that in its own earlier case under the service tax regime, such services had already been held not to be intermediary services. The refund claim of Rs. 56,11,885/- for July 2024 was rejected by the Department on the ground that the Assessee was an intermediary. However, the High Court found that the impugned order required reconsideration because the authority had not properly examined the Assessee’s agreements and contentions, particularly in the light of Sec. 13(8) of the IGST Act, the CBIC circulars dated 20.09.2021, and the law laid down in Sundyne Pumps and Vistex Asia Pacific. Even the Department fairly accepted that remand would be appropriate.
