M/S Ohmi Industries Asia Private Limited vs. Assistant Commissioner, CGST

Facts

The petitioner, M/s Ohmi Industries Asia Private Limited, filed a writ petition challenging an order dated 30.09.2021 which rejected its appeal against an order dated 26.11.2019. The petitioner sought a refund of integrated tax paid on zero-rated supply of services to OHMI Industries Ltd., Japan. The refund application pertained to integrated tax of ₹14,14,604/- paid on two invoices. The Adjudicating Authority rejected the refund application, holding that the petitioner was providing intermediary services, thus not a zero-rated supply. The petitioner appealed, but confined its appeal to the refund of integrated tax amounting to ₹3,71,767/- related to Market Research Services, not contesting the denial for Business Support Services.

Held

The Court held that the impugned order passed by the appellate authority was without application of mind, as it failed to notice that the petitioner's appeal was confined to the refund of integrated tax on Market Research Services. The Court found the respondent's contention that the petitioner facilitated supply between OHMI, Japan, and its customers to be unsustainable. Referring to Section 2(13) of the IGST Act, the Court noted that an intermediary arranges or facilitates supply between two or more persons, but excludes a person who supplies on their own account. The Court also cited Circular No.159/15/2021-GST, which clarifies that intermediary services necessitate a minimum of three parties. Since the petitioner rendered Market Research Services directly to OHMI, Japan, it could not be considered an intermediary for these services. The Court found the issue covered by its previous decision in M/s Ernst And Young Limited v. Additional Commissioner, CGST. Consequently, the impugned order was set aside, and the respondent was directed to process the petitioner's refund claim of ₹3,71,767/- for Market Research Services, along with applicable interest.

Key Issues

1. Whether the petitioner's Market Research Services, provided to OHMI, Japan, constitute intermediary services under Section 2(13) of the IGST Act, thereby disentitling it to a refund of integrated tax on zero-rated supply? Petitioner's arguments: The petitioner contended that it rendered Market Research Services on its own account and did not act as an intermediary between OHMI, Japan, and any other party. It relied on the definition of 'intermediary' in Section 2(13) of the IGST Act, which excludes persons supplying services on their own account, and Circular No.159/15/2021-GST, stating that intermediary services require a minimum of three parties. The petitioner also cited the High Court's decision in M/s Ernst And Young Limited v. Additional Commissioner, CGST Appeals-II, Delhi. Respondent's arguments: The respondent argued that the activities performed under the Market Research Agreement facilitated the supply of services between OHMI, Japan, and its customers in India, thus characterizing the petitioner as an intermediary.