Delhi High Court Directs Dept. To Refund IGST On Telecommunication Services Rendered By Vodafone Idea To Foreign Telecom Operators

The Delhi High Court has directed the department to refund IGST on telecommunication services rendered by Vodafone Idea to foreign telecom operators (FTO).

The Bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that the predecessor of the petitioner (Vodafone India Ltd.) had prevailed before the Customs Excise and Service Tax Appellate Tribunal on the question of whether the services qualified for export services.

The petitioner/assessee was aggrieved by the rejection of its claims for refund of Integrated Goods and Service Tax (IGST) in respect of telecommunication services rendered by the petitioner pursuant to agreements with Foreign Telecom Operators (FTOs).

The adjudicating authorities as well as the Appellate Authority rejected the refund claims on, essentially, two grounds.

Firstly, the services provided by the petitioner in respect of which a refund of IGST was claimed did not qualify as an export of services.

Secondly, the claims preferred were beyond the period of two years from the relevant dates and, therefore, were barred by limitation.

The petitioner contended that the connectivity services rendered by it to inbound subscribers of FTOs qualify as an export of services as the services are rendered to an entity resident outside India—FTOs. The petitioner also claims that its claims for refund were within the prescribed period, as the petitioner had received payments after the date of invoices and its claims were made within a period of two years of receipt of remittances for the services in question.

The issue raised was whether the telecom services provided by the petitioner to inbound subscribers of FTOs constitute exports of services and whether its claims were within the period of limitation as specified under Section 54(1) of the CGST Act.

The assessee contended that FTOs are recipients of the services in question, and since they are located outside India, the place of supply of services is outside India in terms of Section 13 of the IGST Act.

The department contended that the place of service is in India by virtue of Section 13(3)(a) of the IGST Act. The recipients of the services are subscribers of FTOs, and their presence in India is necessary for availing of the services in question.

The court noted that the petitioner had received payments in all cases after the invoices were raised. Thus, the date on which payments had been received from FTOs would be the relevant date for the purpose limitation under Section 54(1) of the CGST Act.

The court noted that the provisions for ascertaining the place of supply of services under Rule 6A of the ST Rules are similar to Section 2(6) of the IGST Act inasmuch as the services will be treated as exports of services when (a) the provider of the service is located in the taxable territory, (b) the recipient of the service is located outside India, and (d) the place of provision of the service is outside India. There is no doubt that the decisions rendered on the question of the export of services in the context of Rule 3 of the Export of Services Rules, 2005, are also applicable to the controversy in question.

Counsel For Petitioner: Vanita Bhargava

Counsel For Respondent: Akshay Amritanshu

Case Title: Vodafone Idea Limited Versus Union Of India & Ors.

Citation: 2023 LiveLaw (Del) 1023

Case No.: W.P.(C) No.2472/2023, CM Nos.9473/2023, 9474/2023 & 51283/2023

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