Madras High Court
Twin Disc Power Transmission Pvt. Ltd vs The Deputy Commissioner (St) on 13 December, 2024
Author: C.Saravanan
Bench: C.Saravanan
W.P.Nos.6678 of 2021 etc., batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 13.12.2024
CORAM :
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.Nos.6678, 6687, 6696, 6700, 6693, 14305, 14310, 14313, 14318
14765 and 23191 of 2021
and
W.M.P.Nos.7238, 7240, 7254, 7247, 7251, 7230, 7244, 7242,
15193, 15209, 15654, 15205, 15213, 24496, 24494,
15194, 15200, 15198, 15206, 15655 of 2021
W.P.No.6678 of 2021
Twin Disc Power Transmission Pvt. Ltd.,
Represented by its Country Manager and
Financial Controller Ms.Indira Bongarala ... Petitioner
Vs.
1.The Deputy Commissioner (ST),
GST Appeals,
Zone VI, Chennai,
4th Floor, PJM Building,
Greams Road, Chennai – 06.
2.The Assistant Commissioner (ST),
Valluvarkottam Assessment Circle,
10, Palaniyappa Maaligai,
Greams Road, Chennai – 600 006.
3.The Assistant Commissioner of GST &
____________
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W.P.Nos.6678 of 2021 etc., batch
Central Excise,
Triplicane Division,
Chennai North Commissionerate,
26/1, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600 034. ... Respondents
Prayer in W.P.No.6678 of 2021: Writ Petition filed under Article 226 of
the Constitution of India, for issuance of a Writ of Certiorarified
Mandamus, to call for the records of the Impugned Order passed by the 1 st
respondent vide Order No.AP/GST/7/2019 dated 31.07.2020 rejecting the
refund claim made for the month of August, 2017, from the files of the 1st
respondent herein, quash the same, and further direct the respondents to
sanction the refund claim made by the petitioner.
For Petitioner : Mrs.Aparna Nandakumar
(In all W.Ps) for Mr.J.Nandakumar
For Respondents :
(In all W.Ps)
For R1 and R2 : Mr.T.N.C.Kaushik
Additional Government Pleader
For R3 : Mr.M.Santhanaraman
Senior Standing Counsel
COMMON ORDER
By this Common Order, all these Writ Petitions are being disposed of.
2. I have considered the arguments advanced by the learned counsel ____________ Page No. 2 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch for the Petitioner, learned Additional Government Pleader for the 1st and 2nd Respondents and the learned Senior Standing Counsel for the 3rd Respondent.
3. The Petitioner is a Private Limited Company engaged in the business of Engineering Design Support Services, Sourcing Support Services and Marketing Support Services and had exported services to its holding Company namely “Twin Disc Incorporated” situated at United States of America (USA) and a group Company called “Twin Disc (Far East) Pte. Ltd.,” situated at Singapore. The Petitioner had made exports to these Companies under two separate “Support Service Agreements” both dated 01.11.2011 signed with the respective Companies.
4. On the exports made by the Petitioner, the Petitioner had claimed refund of “Input Tax Credit” as defined in Section 2(63) of CGST Act availed on the “input service” as defined in Section 2(60) of CGST Act, utilized for effecting export of services, which qualified as “Zero Rated Supply” within the meaning of Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017 (hereinafter referred to as “IGST Act”), as ____________ Page No. 3 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch it stood during the period in dispute. Section 16(3) of IGST Act reads differently during the period in dispute. Section 16(3) of IGST Act as it read during the period in dispute and as it reads now are extracted hereunder:-
Section 16. Zero rated supply Section 16. Zero rated supply (Substituted by the Finance Act, 2021 with effect from 01.10.2023) (3) A registered person making (3) A registered person making zero rated supply shall be eligible zero rated supply shall be eligible to claim refund under either of the to claim refund of unutilized input following options, namely:- tax credit on supply of goods or
(a) he may supply goods or services or both, without payment services or both under bond or of integrated tax, under bond or Letter of Undertaking, subject Letter of Undertaking, in to such conditions, safeguards accordance with the provisions of and procedure as may be Section 54 of the Central Goods prescribed, without payment and Services Tax Act or the rules of integrated tax and claim made thereunder; subject to such refund of unutilised input tax conditions, safeguards and credit; or procedure as may be prescribed:
(b) he may supply goods or services or both, subject to Provided that the registered person such conditions, safeguards making zero rated supply of goods and procedure as may be shall, in case of non-realisation of prescribed, on payment of sale proceeds, be liable to deposit integrated tax and claim the refund so received under this refund of such tax paid on subsection along with the goods or services or both applicable interest under Section supplied, in accordance with 50 of the Central Goods and the provisions of section 54 of Services Tax Act within thirty days the Central Goods and after the expiry of the time limit Services Tax Act or the rules prescribed under the Foreign made thereunder. Exchange Management Act, 1992 ____________ Page No. 4 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 16. Zero rated supply Section 16. Zero rated supply (Substituted by the Finance Act, 2021 with effect from 01.10.2023) (42 of 1999) for receipt of foreign exchange remittances, in such manner as may be prescribed.
5. The refund claims of the Petitioner were filed under Section 54 of CGST Act, 2017 read with Rule 89 of the Central Goods and Services Tax (CGST) Rules, 2017 on the aforesaid export of service made by the Petitioner which were rejected by the 2nd Respondent.
6. In these Writ Petitions, the Petitioner has challenged the Order No.AP/GST/7/2019 dated 31.07.2020 of the 1st Respondent, Rejection Orders and Show Cause Notices issued by the 2nd Respondent and the Deficiency Memos issued by the 2nd Respondent with regard to the refund claim of the Petitioner.
7. There are 4 categories of cases in the present batch of Writ Petitions. 1st category of cases pertain to the Rejection Order of the 1 st ____________ Page No. 5 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Respondent on the appeal preferred by the Petitioner. 2nd category of cases pertain to the Rejection Orders passed by the 2nd Respondent on the refund claims made by the Petitioner. 3rd category of cases pertain to Deficiency Memos issued by the 2nd Respondent against the refund claims of the Petitioner and the 4th category of cases pertains to the Show Cause Notices issued to the Petitioner by the 2nd Respondent.
8. Details of the Rejection Orders/Show Cause Notices/Deficiency Memos/Orders passed by the Respondents and the subject matter of challenge in these Writ Petitions are given below:-
Sl. W.P.No. Month of Refund Proceedings Amount No. Claim of Refund Claimed (Rs.) 6678 of 2021 August, 2017 1st Respondent, 1 AP/GST/7/2019 dated 31.07.2020 67035.00 2 6687 of 2021 September, 2017 1st Respondent, 1,22,948.00 AP/GST/7a/2019 dated 31.07.2020 3 6693 of 2021 August, 2018 2nd Respondent, 1,95,347.00 Refund rejected vide Order dated 21.11.2020 4 6696 of 2021 September, 2018 Deficiency Memo 1,12,503.00 dated 03.12.2020 ____________ Page No. 6 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Sl. W.P.No. Month of Refund Proceedings Amount No. Claim of Refund Claimed (Rs.) 5 6700 of 2021 October, 2018 Deficiency Memo 1,15,346.00 dated 03.12.2020 6 14313 of 2021 November, 2018 Deficiency Memo 1,94,769.00 dated 28.04.2021 7 14318 of 2021 December, 2018 Deficiency Memo 1,43,336.00 dated 29.04.2021 8 14305 of 2021 September, 2018 2nd Respondent, 1,12,503.00 Show Cause Notice dated 17.06.2021
9 14310 of 2021 October, 2018 2nd Respondent, 1,15,436.00 Refund Rejection Order dated 18.06.2021 10 14765 of 2021 September, 2018 2nd Respondent, 1,12,503.00 Show Cause Notice dated 05.07.2021 11 23191 of 2021 January 2019 Deficiency Memo 1,06,296.00 dated 08.10.2021
9. By the Impugned Order dated 31.07.2020, the 1st Respondent dismissed the appeals filed by the Petitioner under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) and confirmed the Orders of rejection passed by the 2nd respondent for months of August, 2017 and September, 2017.
____________ Page No. 7 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch
10. Relevant portion of the Impugned Orders in W.P.No.6678 of 2021 and W.P.No.6687 of 2021 read as under:-
Impugned Order bearing Impugned Order bearing No.AP/GST/7/2019 dated No.AP/GST/7a/2019 dated 31.07.2020 31.07.2020 From the above facts, it can be seen From the above facts, it can be seen that the judgements relied on by the that the judgements relied on by the Appellants are not applicable to the Appellants are not applicable to the facts of the case. facts of the case.
1) The Decision of the Appellate 1) The Decision of the Appellate Tribunal Delhi, in the case of Tribunal Delhi, in the case of GAP International Sourcing GAP International Sourcing (India) Pvt Ltd., Vs. CST Delhi (India) Pvt Ltd., Vs. CST Delhi in which it was held on facts of in which it was held on facts of the case that sourcing support the case that sourcing support service qualifies as Business service qualifies as Business Auxiliary Service and those Auxiliary Service and those services should be treated as services should be treated as delivered outside India. delivered outside India.
2) The Authority of Advance 2) The Authority of Advance Ruling Ruling in AAR/ST/08/2016 in in AAR/ST/08/2016 in the case the case of M/s. Go Daddy India of M/s. Go Daddy India Web Web Services Pvt Ltd., it was Services Pvt Ltd., it was held by held by the AAR that Marketing the AAR that Marketing Support Support Services provided by Go Services provided by Go Daddy Daddy India Web Services Pvt India Web Services Pvt Ltd., to Ltd., to Go Daddy US) does not Go Daddy US) does not qualify qualify as intermediary service as intermediary service and will and will be construed as Export be construed as Export of of Service. This is also differs Service. This is also differs from from the facts of the case and the the facts of the case and the issue issue of distinct person has not of distinct person has not be be dealt. dealt.
____________ Page No. 8 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Impugned Order bearing Impugned Order bearing No.AP/GST/7/2019 dated No.AP/GST/7a/2019 dated 31.07.2020 31.07.2020
3) In the case of Microsoft 3) In the case of Microsoft Corporation (India) Vs. Cue, Corporation (India) Vs. Cue, Delhi III, the Appellate Tribunal Delhi III, the Appellate Tribunal had a occasion to consider the had a occasion to consider the following three question following three question i. Whether the Marketing Support i. Whether the Marketing Support Services (MSS) provided by Services (MSS) provided by the Appellant to Microsoft the Appellant to Microsoft Singapore during the relevant Singapore during the relevant period qualify as export of period qualify as export of service under the Export of service under the Export of Service Rules, 2005 and Service Rules, 2005 and therefore the consideration therefore the consideration including reimbursements including reimbursements received by the Appellant from received by the Appellant from Microsoft Singapore is not Microsoft Singapore is not taxable? taxable?
ii. Whether the reimbursement ii. Whether the reimbursement received in relation to Product received in relation to Product Support Services (PSS) Support Services (PSS) rendered by the Appellant is rendered by the Appellant is not taxable for the period from not taxable for the period from 09.07.2004 to 31.03.2005? 09.07.2004 to 31.03.2005? iii. Whether certain foreign iii. Whether certain foreign currency expenditure incurred currency expenditure incurred by the Appellant from April by the Appellant from April 2006 till March 2009 is not 2006 till March 2009 is not taxable under the Act? taxable under the Act? And as all the issues were to be And as all the issues were to be decided only on facts and the decided only on facts and the facts were not properly facts were not properly discussed by the Adjudicating discussed by the Adjudicating Authority, the answer to all the Authority, the answer to all the three questions were remanded three questions were remanded to the Adjudicating Authority to the Adjudicating Authority ____________ Page No. 9 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Impugned Order bearing Impugned Order bearing No.AP/GST/7/2019 dated No.AP/GST/7a/2019 dated 31.07.2020 31.07.2020 for fresh consideration. The for fresh consideration. The issue for consideration was issue for consideration was only whether the same was only whether the same was liable to tax or not and it was liable to tax or not and it was not with reference to whether it not with reference to whether it is eligible for refund or not. is eligible for refund or not. Therefore all the above decisions Therefore all the above decisions cannot be applied to the case on hand cannot be applied to the case on hand on facts as stated supra. on facts as stated supra. On fact the taxable person has paid On fact the taxable person has paid tax on the import of service from tax on the import of service from Twin Disc Incorporated, USA for the Twin Disc Incorporated, USA for the Expenses Reimbursement for the Cost Sharing Charges for the month of July 2017 under RCM for month of August 2017 under RCM. import of services. Reimbursement Cost Sharing Charges takes place of expenses takes place only only between two distinct entities in between two distinct entities in accordance with Explanation 1 in accordance with Explanation 1 in Section 8 of the IGST Act 2017. Section 8 of the IGST Act 2017. Therefore, the value IGST of Therefore, the value IGST of Rs.26,582/-, CGST of Rs.48,183/- Rs.4,025/-, CGST of Rs.31,505/- and SGST of Rs.48,183/- are not and SGST of Rs.31,505/- are not eligible for refund as the services eligible for refund as the services covered in the Invoices do not covered in the Invoices do not qualify for export of services. qualify for export of services. Therefore the Refund Rejection Therefore the Refund Rejection Order passed by the Assistant Order passed by the Assistant Commissioner, Valluvarkottam as Commissioner, Valluvarkottam as per the provisions of the TNGST per the provisions of the TNGST Act/CGST Act and IGST Act 2017 Act/CGST Act and IGST Act 2017 calling for no intervention. calling for no intervention.
11. Thereafter, the 2nd Respondent rejected the refund claims for the ____________ Page No. 10 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch succeeding months from August, 2018 to January, 2019 by passing the Impugned Rejection Order dated 21.11.2020 and issued Deficiency Memos for the months of September, 2018 and October, 2018.
12. Section 54 of CGST Act and Rule 89 of CGST Rules, 2017 reads as under:-
Section 54 of CGST Act, 2017 Rule 89 of CGST Rules, 2017
54. Refund of tax 89. Application for refund of (1) Any person claiming refund tax, interest, penalty, fees or any of any tax and interest, if any, other amount paid on such tax or any other (1) Any person, except the persons amount paid by him, may covered under notification make an application before issued under Section 55, the expiry of two years from claiming refund of any tax, the relevant date in such form interest, penalty, fees or any and manner as may be other amount paid by him, prescribed: other than refund of integrated Provided that a registered tax paid on goods exported out person, claiming refund of of India, may file, subject to any balance in the electronic the provisions of Rule 10B, an cash ledger in accordance application electronically in with the provisions of sub- FORM GST RFD-01 through section (6) of Section 49, may the common portal, either claim such refund in such directly or through a form and manner as may be Facilitation Centre notified by prescribed. the Commissioner.
(2) A specialised agency of the Provided that any claim for United Nations Organisation refund relating to balance in or any Multilateral Financial the electronic cash ledger in Institution and Organisation accordance with the provisions notified under the United of sub-section (6) of Section ____________ Page No. 11 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 54 of CGST Act, 2017 Rule 89 of CGST Rules, 2017 Nations (Privileges and 49 may be made through the Immunities) Act, 1947 (46 of return furnished for the 1947), Consulate or Embassy relevant tax period in FORM of foreign countries or any GSTR-3 or FORM GSTR-4 other person or class of or FORM GSTR-7, as the persons, as notified under case may be:
Section 55, entitled to a Provided further that in respect refund of tax paid by it on of supplies to a Special inward supplies of goods or Economic Zone unit or a services or both, may make Special Economic Zone an application for such developer, the application for refund, in such form and refund shall be filed by the- manner as may be prescribed, before the expiry of two years (a) supplier of goods after such from the last day of the goods have been admitted in quarter in which such supply full in the Special Economic was received. Zone for the authorised operations, as endorsed by (3) Subject to the provisions of the specified officer of the sub-section (10), a registered Zone;
person may claim refund of any unutilised input tax credit (b) supplier of services along at the end of any tax period: with such evidence regarding receipt of services for Provided that no refund of authorised operations as unutilised input tax credit endorsed by the specified shall be allowed in cases officer of the Zone. other than-
Provided also that in respect i. zero-rated supplies made of supplies regarded as without payment of tax; deemed exports, the ii. where the credit has application may be filed by,- accumulated on account of (a) the recipient of deemed rate of tax on inputs being export supplies; or higher than the rate of tax on output supplies other (b) the supplier of demand than nil rated or fully export supplies in cases exempt supplies, except where the recipient does supplies of goods or not avail of input tax credit services or both as may be on such supplies and ____________ Page No. 12 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 54 of CGST Act, 2017 Rule 89 of CGST Rules, 2017 notified by the Government furnishes an undertaking to on the recommendations of the effect that the supplier the Council. may claim the refund.
Provided further that no Provided also that refund refund of unutilised input of any amount, after tax credit shall be allowed adjusting the tax payable in cases where the goods by the applicant out of the exported out of India are advance tax deposited by subject to export duty. him under Section 27 at Provided also that no the time of registration, refund of input tax credit shall be claimed in the last shall be allowed, if the return required to be supplier of goods or furnished by him.
services or both avails of (1A) Any person, claiming refund drawback in respect of under Section 77 of the Act central tax or claims refund of any tax paid by him, in of the integrated tax paid on respect of a transaction such supplies. considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, may, before the expiry of a period of two years from the date of payment of the tax on the inter-State supply, file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
Provided that the said application may, as regard to any payment of tax on inter-State supply before coming into force of this sub-rule, be filed before the expiry of a period of two years from the date ____________ Page No. 13 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 54 of CGST Act, 2017 Rule 89 of CGST Rules, 2017 on which this sub-rule comes into force.
13. The case of the Petitioner is that the Petitioner was originally under the Central Authority and for the export made during the month of July 2017, the Central Authority had also rightly allowed the refund claim of the Petitioner in terms of Section 54 of CGST Act read with Section 16 of IGST Act.
14. However, for the exports made during the subsequent months, namely August and September 2017, the 2nd Respondent rejected the refund claims by two separate Orders dated 11.06.2018 which culminated in the appeal Order dated 31.07.2020 of the 1st Respondent which are impugned in W.P. Nos. 6678 and 6687 of 2021.
15. It is the further case of the Petitioner that on the identical exports made by the Petitioner, the 2nd Respondent has also granted refund of Input ____________ Page No. 14 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Tax Credit during the interregnum for the period between October 2017 and July 2018. However, the 2nd Respondent rejected the refund claim for the succeeding months from August 2018 to January 2019 either by passing the Rejection Order dated 21.11.2020 and the Rejection Order dated 18.06.2021 which are subject matter of challenge in W.P. No.6693 of 2021 and W.P. No.14310 of 2021 or by issuing Deficiency Memos which are the subject matter of challenge in W.P. Nos. 6696, 6700, 14313, 14318 and 23191 of 2021.
16. The thumb rule under Section 13(2) of IGST Act is that the place of supply of service shall be the location of the recipient of service except in the circumstances specified in Section 13(3) of IGST Act. Sub-
Section 3 to Section 13 of IGST Act reads as under:-
“13. Place of supply of services where location of supplier or location of recipient is outside India (1) ...
(2) ...
(3) The place of supply of the following services shall be the location where the services are actually performed, namely:-
(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of ____________ Page No. 15 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch services in order to provide the services:
Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services.
Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process.
(b) services supplied to an individual, represented either as the recipient or services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.”
17. The issue in these Writ Petitions centres around the interpretation of the definition of “export of services” as in Section 2(6) of IGST Act. The stand of the Department in these proceedings is that the Petitioner has not satisfied the requirements of Clause (iii) and Clause (v) to Section 2(6) of IGST Act. For the sake of clarity, Section 2(6) of IGST Act is reproduced below:-
“2. Definitions (1) ...
(2) ...
____________ Page No. 16 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch (3) ...
(4) ...
(5) ...
(6) “export of services” means the supply of any service when,-
i. the supplier of service is located in India; ii. the recipient of service is located outside India; iii. the place of supply of service is outside India; iv. the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and v. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8.”
18. As far as Clause (v) to Section 2(6) of IGST Act is concerned, the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8 of IGST Act. The issue also stands covered against the Respondents in terms of Paragraph 5.1 of Circular No.161/17/2021-GST dated 20.09.2021 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing, Department of Revenue, Ministry of Finance, Government of India.
19. The above Clarification of the Board in Paragraph 5.1 of Circular No.161/17/2021-GST dated 20.09.2021 reads as under:-
____________ Page No. 17 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch “5.1. In view of the above, it is clarified that a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India, which is also referred to as foreign company under Companies Act, are separate persons under CGST Act, and thus are separate legal entities. Accordingly, these two separate persons would not be considered as “merely establishments of a distinct person in accordance with Explanation 1 in Section 8”.
5.2 Therefore, supply of services by a subsidiary/sister concern/group concern, etc., of a foreign company, which is incorporated in India under the Companies Act, 2013 (and thus qualifies as a 'company' in India as per Companies Act), to the establishments of the said foreign company located outside India (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act, 2017 for being considered as export of services, as it would not be treated as supply between merely establishments of distinct persons under Explanation 1 of Section 8 of IGST Act, 2017.
Similarly, the supply from a company incorporated in India to its related establishments outside India, which are incorporated under the laws outside India, would not be treated as supply to merely establishments of distinct person under Explanation 1 of Section 8 of IGST Act, 2017. Such supplies, therefore, would qualify as 'export of services', subject to fulfilment of other conditions as provided under sub-section (6) of Section 2 of IGST Act.
6. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.” ____________ Page No. 18 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch
20. In view of the above, the objection of the Respondents insofar as the failure of the Petitioner to satisfy the condition in Section 2(6)(v) of IGST Act has to be overruled and answered in favour of the Petitioner.
21. In any event, this issue has also been answered by this Court in Vuram Technology Solutions (P.) Ltd., Vs. Additional Commissioner of GST (Appeals) vide Order dated 10.04.2024 in W.P (MD) No.15092 of 2022 wherein, the Court has ultimately held as under:-
“13.In my view, the above interpretation placed by the first respondent is incorrect. Admittedly, the petitioner and its subsidiary are two distinct entities and therefore, it cannot be said that the petitioner has not satisfied the requirements of Section 2(6)(v) of IGST Act, 2017. The doctrine of the authority for advance Ruling in Segoma Imaging Technologies India Pvt. Ltd., reported in 2019 (20) GSTL 611 (AAR-GST) cannot be applied to the facts of this case.
14.It cannot be said that the petitioner and its subsidiary are not merely establishment of a distinct person in accordance with the explanation I in Section 8 of the IGST Act, 2017. The issue now stands clarified by Circular No.161/17/2021-GST dated 20.09.2021 bearing Ref.F.No.CBIC-20001/8/2021-GST, content of, which has been extracted above.
15.This view has also been followed by the Delhi ____________ Page No. 19 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch High Court in Xilinx India Technology Services (P) Ltd.(supra). That apart, the Revenue cannot argue against its own circular, although such clarification in Circular of the Board are much binding on the petitioner nor on this Court. The view expressed in the said circular is correct and clarifies the legal position and therefore, this Court is not inclined to take a different view, though such a circular is not binding on this Court.
16.Since the view taken by the Board is correct, the impugned order is liable to be set aside. Consequently, the second respondent is directed to process the re-fund claim of the petitioner together with interest payable in accordance with the provisions of the Act as expeditiously as possible, preferably within a period of 12 weeks from the date of receipt of a copy of this order.
17.The Writ Petition stands allowed, with the above directions. No costs. Consequently, connected Miscellaneous Petition is closed.”
22. As far as the other requirements regarding place of supply of service to be outside India in Section 2(6)(iii) of the Act is concerned, it has to be read along with Section 13(2) of IGST Act. For the sake of clarity, Section 2(6)(iii) and Section 13(2) of IGST Act are extracted hereunder:-
Section 2(6)(iii) of IGST Act Section 13(2) of IGST Act
2. Definitions 13. Place of supply of services In this Act, unless the context where location of supplier or otherwise requires,- location of recipient is outside ____________ Page No. 20 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 2(6)(iii) of IGST Act Section 13(2) of IGST Act (1) ... India (2) ... (1) ...
(3) ... (2) The place of supply of services (4) ... except the services specified in sub-sections (3) to (13) shall (5) ... be the location of the recipient (6) “export of services” means the of services.
supply of any service when,- Provided that where the
i. ... location of the recipient of
services is not available in the
ii. ... ordinary course of business,
iii. the place of supply of the place of supply shall be the
service is outside India. location of the supplier of
services.
23. According to the Respondents Department, service provided by the Petitioner to its holding Company and the group Company under the 2 Service Agreements would come within the definition of “intermediary service” as defined in Section 2(13) of IGST Act and therefore, supply of service in the case of the Petitioner shall be the location of the Petitioner itself in terms of Section 13(8)(b) read with Section 13(2) and the definition in Section 2(13) of IGST Act. Section 2(13), Section 13(2) and Section 13(8)(b) of IGST Act are extracted below:-
Section 2(13) of IGST Section 13(2) of IGST Section 13(8)(b) of Act Act IGST Act
2. Definitions 13. Place of supply of 13. Place of supply of ____________ Page No. 21 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch Section 2(13) of IGST Section 13(2) of IGST Section 13(8)(b) of Act Act IGST Act In this Act, unless the services where location services where context otherwise of supplier or location location of supplier or requires,- of recipient is outside location of recipient is (13) “Intermediary” India outside India means a broker, an (1) ... (8) The place of supply agent or any other (2) The place of supply of the following person, by whatever of services except the services shall be the name called, who services specified in location of the supplier arranges or facilitates sub-sections (3) to of services, namely:-
the supply of goods or (13) shall be the (a) ... services or both, or location of the (b) intermediary securities, between two recipient of services.
or more persons, but services
does not include a Provided that where
person who supplies the location of the
such goods or services recipient of services is or both or securities on not available in the his own account. ordinary course of business, the place of supply shall be the location of the supplier of services.
24. Sub-Section 13 to Section 13 of IGST Act is attracted. The definition of “intermediary” in Section 2(13) of IGST Act, makes it clear that it applies to a broker, an agent, or any other person, by whatever name called, who arranges or facilitates the supply of goods or service or both, or securities, between two or more persons. Section 2(13) of IGST Act is extracted hereunder:-
____________ Page No. 22 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch “2. Definitions In this Act, unless the context otherwise requires,- (13) “Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.”
25. The definition excludes a person, who supplies such goods or services or both or securities from his own account. Thus, it cannot be said that the Petitioner acted as a broker or an agent or any other person who arranged or facilitated the supply of goods or services or both between two or more persons.
26. In this context, it is to be borne in mind that the Petitioner has an independent Support Service Agreements both dated 01.11.2011 with its holding Company namely Twin Disc Incorporated situated in USA and group Company namely Twin Disc (Far East) Pte. Ltd situated in Singapore.
27. A reading of the Support Service Agreements both dated 01.11.2011 entered between the Petitioner and its holding company makes ____________ Page No. 23 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch it clear that the services provided by the Petitioner to these two Companies which are holding and the group Companies are from its own account and not on its broker, agent or any other person who arranged or facilitated the supply of goods or services or both between two or more persons.
28. Therefore, there is no legal basis on which, the benefit of rules that is available for export of service as defined in Section 2(6) of IGST Act can be denied to the Petitioner.
29. Under these circumstances, the Impugned Orders passed by the 1st Respondent and the Impugned Rejection Orders passed by the 2nd Respondent and the Impugned Deficiency Memos and the Show Cause Notices issued by the 2nd Respondent are liable to be quashed, and are accordingly quashed with consequential relief to the Petitioner.
30. The 2nd Respondent is directed to refund the amount claimed by the Petitioner on the exports made by the Petitioner to its holding Company and the group Company within a period of 30 days from the date of receipt of a copy of this order.
____________ Page No. 24 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch
31. These Writ Petitions are allowed. No costs. Connected Writ Miscellaneous Petitions are closed.
13.12.2024 Neutral Citation : Yes / No arb To:
1.The Deputy Commissioner (ST), GST Appeals, Zone VI, Chennai, 4th Floor, PJM Building, Greams Road, Chennai – 06.
2.The Assistant Commissioner (ST), Valluvarkottam Assessment Circle, 10, Palaniyappa Maaligai, Greams Road, Chennai – 600 006.
3.The Assistant Commissioner of GST & Central Excise, Triplicane Division, Chennai North Commissionerate, 26/1, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.
____________ Page No. 25 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am ) W.P.Nos.6678 of 2021 etc., batch C.SARAVANAN, J.
arb W.P.Nos.6678 of 2021 etc., batch 13.12.2024 ____________ Page No. 26 of 26 https://www.mhc.tn.gov.in/judis ( Uploaded on: 16/06/2025 10:44:34 am )