Roaming Services And International Long Distance Services Provided By Vodafone Idea To Foreign Telecom Operators Is An Export Of Service: Bombay High Court

The Bombay High Court has ruled that the international Inbound Roaming Services (IIR) and the International Long Distance (ILD) Services provided by Vodafone Idea to Foreign Telecom Operators (FTOs) is an export of services, and thus, Vodafone Idea is eligible for the refund of the IGST paid by it. The Bench, consisting of Justices K. R. Shriram and Milind N. Jadhav, observed that Vodafone Idea had entered into agreements with the FTOs and that there was no mention of any agreement with the subscribers of the FTOs. Hence, the Court ruled that the subscribers of the FTO cannot be considered as the recipient of the services and that the said services rendered by Vodafone Idea were supplied to the FTOs. Noting that the provisions of Section 13(2) of the IGST Act were applicable, the Court held that the place of supply of service was the location of the recipient of the service, i.e., the location of the FTO, which was outside India. Under the telecommunication license received from the Government of India, the petitioner Vodafone Idea Limited provides telecom services, including international Inbound Roaming Services (IIR) and International Long Distance (ILD) Services to Foreign Telecom Operators (FTOs). Vodafone Idea Limited is registered under the Maharashtra Goods and Services Tax Act, 2017. Vodafone Idea exported services on payment of Integrated Goods and Service Tax (IGST) and subsequently, claimed refund of such tax paid, as provided under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). Vodafone Idea applied for refund of IGST paid on export of the said services, i.e., the Inbound Roaming Services and the International Long Distance Services to Foreign Telecom Operators, in accordance with the provisions of Section 54 of the Central Goods and Service Tax Act, 2017 (CGST Act) read with Rule 96 of the Central Goods and Service Tax Rules, 2017 (CGST Rules). The revenue authorities passed an order rejecting the refund claims of Vodafone Idea Limited on the ground that the place of supply of services provided by Vodafone Idea was the State of Maharashtra and therefore, it cannot be considered as export of services. Against this, Vodafone Idea filed an appeal before the Joint Commissioner of CGST and Central Tax (Appeals), who allowed the appeal. Vodafone Idea filed a writ petition before the Bombay High Court seeking a direction to the revenue authorities to implement the order passed by the Joint Commissioner (Appeals) of allowing the refund claims of Vodafone Idea. Challenging the order passed by the Joint Commissioner (Appeals), the revenue department filed a writ petition before the Bombay High Court. The petitioner Vodafone Idea submitted before the High Court that all telecom service providers have an agreement with other telecom service providers in different countries or circles to provide telecom services to their customers when they are traveling to other countries and vice versa. Thus, Vodafone Idea averred that it was contractually obligated only to the Foreign Telecom Operators (FTOs) for the roaming telecommunication services and the international long distance call services rendered under the agreement. Vodafone Idea added that the consideration was payable to it by the FTOs in convertible foreign exchange. Vodafone Idea contended that the location of the recipient of the services rendered by Vodafone Idea is that of the FTO's and hence, the place of supply where the services were consumed was outside India. The petitioner averred that the international Inbound Roaming Services (IIR) and the International Long Distance (ILD) Services have always been considered as export of services. Thus, the petitioner Vodafone Idea submitted that the contention of the revenue department that the place of supply for the roaming services provided by it was within the taxable territory of India cannot be accepted. The revenue department contended that "export of services" is defined under Section 2(6) of the IGST Act; and that as per the third condition prescribed therein, for a supply to qualify as export of service it is necessary that the place of supply of service is outside India. The revenue department averred that the roaming services provided by Vodafone Idea to customers of foreign entities were actually consumed in India by the customers visiting India from abroad. The revenue department submitted that since the customers of the FTOs made calls within the territory of Maharashtra, the place of supply of service was within Maharashtra and not outside India. Thus, the revenue department contended that in the light of Section 13(3)(b) of the IGST Act, the said third condition prescribed under Section 2(6) of the IGST Act, i.e., the requirement of the place of supply being outside India, has not been fulfilled. Therefore, the revenue department averred that the said...

Roaming Services And International Long Distance Services Provided By Vodafone Idea To Foreign Telecom Operators Is An Export Of Service: Bombay High Court

Parina Katyal

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