Delhi High Court - Orders
Uber Systems India Private Limited vs Union Of India & Anr on 10 November, 2023
Author: Subramonium Prasad
Bench: Subramonium Prasad
$~34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 14755/2023 & CM APPL. 58697/2023
UBER SYSTEMS INDIA PRIVATE LIMITED ..... Petitioner
Through: Mr. Kamal Sawhney, Mr. Krishna
Rao and Mr. Nishank Yashitha,
Advocates.
versus
UNION OF INDIA & ANR. ..... Respondents
Through: Mr. Ripu Daman Bhardwaj, CGSC
with Mr. Kushagra Kumar, GP and
Mr. Abhinav Bhardwaj, Advocate.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
ORDER
% 10.11.2023
1. The Petitioner seeks to challenge the Orders dated 11.09.2023, 22.02.2022 and 19.03.2021 disallowing the benefit of Service Exports from India Scheme (SEIS) to the Petitioner.
2. It is stated by the learned Counsel for the Petitioner that the fact that the Petitioner is providing services which would entitle the Petitioner to the benefit of SEIS Scheme is no longer res integra in view of the Judgment passed by the Division Bench of this Court in Verizon Communication India Pvt. Ltd. vs. Assistant Commissioner, Service Tax, Delhi III, Division-XIV & Anr., 2017 SCC OnLine Del 10299. The relevant portion of the said Judgment reads as under:
This is a digitally signed order.
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30. At this juncture it is required to be recalled that the refund claims of Verizon India are for the period from January 2011 to September 2014. Some part thereof fell within the period 27th February 2010 till 30th June 2012 when Rule 3 of the ESR (as amended) applied and only two criteria, as noted hereinbefore, had to be fulfilled. The ESR was, with effect from 1st July 2012, replaced by Rule 6A of Services Tax Rules 1994 („ST Rules‟) which reads as under:
"6A (1) The provision of any service provided or agreed to be provided shall be treated as export of service when-
(a) the provider of service is located in the taxable territory,
(b) the recipient of service is located outside India,
(c) the service is not a service specified in Section 6D of the Act,
(d) the place of provision of the service is outside India.
(e) The payment for such service has been received by the provider of service in convertible foreign exchange; and
(f) The provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of Section 65B of the Act.
(2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/11/2023 at 21:01:49 conditions and limitations, as may be specified, by the Central Government, by notification."
31. For the period prior to 1st July 2012, while there is no dispute that payment for the service rendered by Verizon India has been received by it in convertible foreign exchange there is a dispute as to whether the recipient of the service is located outside India. According to Verizon India, the recipient of the service is Verizon US whereas the Department's case is that the recipient of the service is an Indian entity from whom electronic data is collected or to whom data is transmitted.
32. Even for the period post 1st July 2012, it is not in dispute that Rule 6A(1)(a) of the ST Rules is fulfilled inasmuch as Verizon India, which is the service provider, is located in the taxable territory i.e. India. There is also no difficulty as far as the criteria at Rule 6A(1)(d) of the ST Rules is concerned since „telecommunication service‟ is not in the negative list under Section 66D of the FA. Rule 6A(1)(e) of the ST Rules is also fulfilled since payment for the service rendered by Verizon India has been received by it in convertible foreign exchange. There is also no dispute as regards Rule 6A(1)(f) of the ST Rules. The controversy is regarding Rule 6A(1)(b) and (d) of the ST Rules are fulfilled. In other words can it be said that (i) the recipient of the service is located outside India and (ii) the place of the provision of service is outside India. While Verizon India asserts that the answers to both questions are in the affirmative, the Department asserts the contrary.
The case of the Department
33. The impugned order dated 12th September 2016 as well as the resultant SCN dated 11th November 2016 encapsulates the case of the Department. According to This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/11/2023 at 21:01:50 it, on a study of the Master Supply Agreement between Verizon India and Verizon US, it is plain that Verizon is providing Verizon US „telecommunication services‟ and not „business support services‟. The invoices raised by Verizon India on Verizon US give describe the services as „Provision of Network Capacity International Interconnect‟. Secondly, Verizon India and „Verizon US‟ are „related parties'. The provision of services is entirely within India and, therefore, the services provided by Verizon India cannot be termed as „export of services‟.
34. Mr. Sanjeev Narula, learned Senior standing counsel for the Department further explained that the Department relies on Circular No. 141/10/2011-TRU dated 13th May, 2011 issued by the Central Board of Excise and Customs (CBEC) which, inter alia, clarified that "where the consultancy, though paid by a client located outside India, is actually used in respect of a project or an activity in India the service cannot be said to be used outside India." Reliance is also placed on Circular No. 111/05/2009 dated 24th February, 2009.
35. Mr. Narula contends that Verizon India's role was to provide connectivity services and operational support in prescribed way and manner as required by Verizon US "to render telecommunication services to its customers when visiting India." Further, he did not agree that the Circular No. 90/1/2007 ST dated 3rd January, 2007 has been repealed by the Circular No. 96/7/2007-ST dated 23rd August, 2007 and is, therefore, no longer applicable. According to him, the Circular dated 23rd August, 2007 "nowhere mentions the services provided by the party and claimed as export by them."
Case of Verizon India This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/11/2023 at 21:01:50
36. On the other hand, the case of Verizon India, as articulated by Mr. Venkataraman, learned Senior counsel appearing on its behalf, is based on the major premise underlying service tax viz., it is a destination based consumption tax. According to him the Department's case is based on a misconception of the „recipient‟ of the service. According to him there is a distinction between the „user‟ of a service and its „recipient. This had to be determined strictly with reference to the underlying contract between Verizon India and Verizon US. He submits that the Department cannot impute a contract between Verizon India and the customers of Verizon US or their counterparts in India when there is none.
3. Issue notice.
4. Mr. Ripu Daman Bhardwaj, learned CGSC, accept notice on behalf of the Respondents.
5. In view of the fact that the Petitioner's case is squarely covered by the aforesaid Judgment and the Petitioner has been able to make out a prima facie case in its favour, the Orders under challenge in instant writ petition are stayed till the next date of hearing.
6. The application of amendment to the writ petition be filed before the next date of hearing.
7. List on 01.02.2024.
SUBRAMONIUM PRASAD, J NOVEMBER 10, 2023 S. Zakir This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/11/2023 at 21:01:50