M/S Wipro Ge Healthcare PVT LTD vs. Deputy Commissioner Of

The petitioner No. 1 submitted its reply dated 13-5- 2016 as under: “(i) The transaction of provision of service by the petitioner No. 1 to the recipient outside India would clearly fall within the ambit of Rule 3 of the Place of Provision of Service Rules, 2012 (hereinafter referred to as “the PPSR”); (ii) The petitioner No. 1 would not be covered by any of the exceptions, namely Rule 4 to Rule 12 of the PPSR; (iii) The provision of the service by the petitioner No. 1 would qualify as ‘Export of Service’ in terms of the provisions of Rule 6A of the STR, and all conditions mandatorily required to be satisfied under the said Rule, stand satisfied by the petitioner No. 1; (iv) The place of provision of the service, admittedly, was outside India, and the payment in relation to the same was also received in convertible foreign exchange; NC: 2025:KHC:16149 (v) The petitioner No. 1 and the recipient of service, i.e. Linde AG, Germany are independent legal entities and that the latter are not an establishment of the petitioner No. 1.” xxxxxxxxxxx

Having heard the Learned Advocates for the respective parties and having gone through the materials on record, short question which arises for consideration is whether the action of the respondents in issuing show cause notice is without juri iction and contrary to the provisions of Rule 6A of the Rules, 1994 read with Section 65B(44) of the Act, 1994 or not.

A Co-ordinate Bench of this Court has passed the following order on 11-9-2018:

Accordingly, it is submitted that action of the respondent in issuing show cause notice is without juri iction and contrary to the provisions of Rule 6A of Sales Tax Rules read with Section 65B(44) of the Act.

Considering the above and upon reading the contents of the show cause notice impugned in juxtaposition to statutory provisions, we are inclined to issue NOTICE returnable on 27th September 2018. Meanwhile, there shall be ad-interim relief in terms of paragraph 9(b) of the petition. Direct service is permitted.”

The facts of the case are not in dispute that the petitioner No. 1, who is 100% subsidiary of Linde AG, Germany, which is a leading worldwide technology partner for plant engineering and construction, and is inter alia engaged in the provision of consulting engineering and other services to various entities located in India and outside. On the basis of the scrutiny of the records of the petitioner No. 1 by Central Excise Revenue Audit (CERA), it was observed by the respondents that the petitioner No. 1 was rendering services to other organizations located in different countries out of India and was not charging service tax on such services treating the same as “export of services”, more particularly, the petitioner No. 1 rendered services to its parent Company and other establishments of Linde Group outside India without payment of service tax by wrongly treating the same as ‘export of service’. NC: 2025:KHC:16149

Therefore, to consider the contentions raised by the petitioners that the impugned show cause notice is without juri iction, it would be germane to refer to the various provisions of the Act, 1994 and the Rules, 1994 read with Rules, 2004, which are made applicable to assume the juri iction by the respondent No. 3 to issue impugned show cause notice. (i) Section 65B(44) of the Act, 1994 reads thus: “65B. In this Chapter, unless the contest otherwise requires,- xx xx xx (44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29 A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1. - For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State NC: 2025:KHC:16149 Governments or local authority and who is not deemed as an employee before the commencement of this section. ‘Explanation 2. - For the purposes of this clause, the expression “transaction in money or actionable claim” shall not include- (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out- (a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998;. (Finance Act, 2016); (b) by a foreman of chit fund for conducting or organising a chit in any manner.’ Explanation 3. - For the purposes of this Chapter,- (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory and any of his other establishment in a non- taxable territory shall be treated as establishments of distinct persons. Explanation 4. - A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory;” (ii) Section 66B of the Act, 1994 reads thus: “Charge of service tax on and after Finance Act, 2012. 66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per cent, on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.” (iii) Section 66C of the Act, 1994 reads thus: “Determination of place of provision of service. - NC: 2025:KHC:16149 66C. (1) The Central Government may, having regard to the nature and description of various services, by rules made in this regard, determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory.” (iv) Section 73 of the Act, 1994 reads thus: “Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. -

(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words “thirty months”, the words “five years” had been substituted. Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of thirty months or five years, as the case may be.” (v) Rule 6A of the Rules, 1994 reads thus: “Export of services. - ‘6A. (1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- NC: 2025:KHC:16149 (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 the section 66D 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, conditions and limitations, as may be specified, by the Central Government, by notification.” (vi) Rule 2(e) as well as Rule 6 of the Cenvat Credit Rules, 2004 reads thus:

On perusal of the above provisions of the Act, 1994 and the Rules, 1994 read with Rules, 2004, it emerges that Rule 6A of the Rules, 1994 provides that services rendered would be treated as “Export of services” when clause (a) to clause (d) refers to provider of service is located in the taxable territory and recipient of service is located outside India and the service is not a service specified in Section 66D of the Act and the place of the provision of the service is outside India and as per clause (e) the payment for such service has been received by the provider of service in convertible Foreign Exchange. It emerges that the petitioner is fulfilling all the conditions, however, so far as the clause (f) of Rule 6A of Rules, 1994 is concerned, it provides that 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. As per clause (44) of Section 65B of the Act, 1994 “service” means any activity carried out by a person for another for consideration, and includes a declared service. Item (b) of the explanation 3 stipulates that an establishment of a person in taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Therefore, a question arises in the fact of the present case, whether the services provided by the NC: 2025:KHC:16149 petitioner No. 1 located in India which is a taxable territory and the recipient of the service i.e. holding Company of the petitioner No. 1 located outside India which is a nontaxable territory, whether both of them would be two establishments of the same Company or not so as to treat them as distinct persons liable for service tax. If the answer to this question is in affirmative, as interpreted in the impugned show cause notice that providing the services by the petitioner No. 1 to its parent Company would be to the establishment of the petitioner and therefore it would be a distinct person, then rendering of service by the petitioner No. 1 cannot be treated as “Export of Services” as per Rule 6A(f) of Rules, 1994 because as per explanation 3(b) to Section 65B(44) of the Act, 1994, the petitioner and holding Company are to be treated as distinct person as per the understanding of the respondent No. 3, and therefore the petitioner would be liable to pay service tax.

However, on analysis of the aforesaid provisions, it appears that the respondents have assumed the juri iction on mere misinterpretation of the provisions of explanation 3(b) to Section 65B(44) of the Act, 1994 read with Rule 6A of the Rules, 1994 as by no stress of imagination, it can be said that the rendering of services by the petitioner No. 1 to its parent Company located outside India was service rendered to its other establishment so as to deem it as a distinct person as per Item (b), explanation 3 of clause (44) of Section 65B of the Act, 1994, the petitioner No. 1 which is an establishment in India, which is a taxable territory and its 100% holding Company, which is the other company in non- NC: 2025:KHC:16149 taxable territory cannot be considered as establishments so as to treat as distinct persons for the purpose of rendering service. Therefore, the services rendered by the petitioner No. 1-Company outside the territory of India to its parent Company would have to be considered “export of service” as per Rule 6A of the Rules, 1994 and Clause (f) of Rule 6A of the Rules, 1994 would not be applicable in the facts of the case as the petitioner No. 1, who is the provider of service and its parent Company, who is the recipient of services cannot be said to be merely establishment so as to be distinct persons in accordance with Item (b) explanation 3 of Clause (44) of Section 65B of the Act, 1994. 13. In such circumstances, the respondents, would not have any juri iction to invoke the provisions of the Act, 1994 read with Rules, 1994 to bring the services rendered by the petitioner No. 1 to its parent Company within the purview of levy of service tax under the provisions of the Act, 1994. 14. Moreover, the impugned show cause notice is also not tenable in law as the same is issued invoking Section 73 of the Act, 1994 for extending the period for the issuing the Notice on the ground of alleged wilful misstatement or suppression of the facts on the part of the petitioner No.

In view of the above facts and circumstances of the case and the discussion, the impugned show cause notice issued by the respondent No. 1 is without juri iction and as such the petition is maintainable under Article 226 of the Constitution of India as held by the Apex Court in the case of Whirlpool Corpn. v. Registrar of Trade Marks reported in (1998) 8 SCC 1 as under:

This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani and was affirmed and followed in the following words: “The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the Learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre- eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.” NC: 2025:KHC:16149

Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO, Companies Distt.-I laid down: “Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without juri iction. Where such action of an executive authority acting without juri iction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against the Income Tax Officer acting without juri iction under Section 34, Income Tax Act.”

Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the juri iction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no juri iction or had purported to usurp juri iction without any legal foundation.”

In view of the above legal position, the reliance placed on behalf of the respondents on the various decisions of the Apex Court, which are based on the facts of each case, would not be applicable as the impugned show cause notice is held to be issued without juri iction as the respondents could not have issued the same invoking the provisions of Section 73 of the Act, 1994 read with Section 65B(44) and Rule 6A of the Rules, 1994. 17. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned show cause notice dated 10-11-2017 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent with not order as to costs.” NC: 2025:KHC:16149

In Northern Operating System’s case supra, the Apex Court held as under:-

The issue which this Court has to decide is whether the overseas group company or companies, with whom the assessee has entered into agreements, provide it manpower services, for the discharge of its functions through seconded employees.

The contemporary global economy has witnessed rapid cross-border arrangements for which dynamic mobile workforces are optimal. To leverage talent within a transnational group, employees are frequently seconded to affiliated or group companies based on business considerations. In a typical secondment arrangement, employees of overseas entities are deputed to the host entity (Indian associate) on the latter's request to meet its specific needs and requirements of the Indian associate. During the arrangement, the secondees work under the control and supervision of the Indian company and in relation to the work responsibilities of the Indian affiliate. Social security laws of the home country (of the secondees) and business considerations result in payroll retention and salary payment by the foreign entity, which is claimed as reimbursement from the host entity. The crux of the issue is the taxability of the cross-charge, which is primarily based on who should be reckoned as an employer of the secondee. If the Indian company is treated as an employer, the payment would in effect be reimbursement and not chargeable to tax in the hands of the overseas entity. However, in the event the NC: 2025:KHC:16149 overseas entity is treated as the employer, the arrangement would be treated as service by the overseas entity and taxed.

In Director of Income Tax v. Morgan Stanley & Co. Inc. [DIT (International Taxation) v. Morgan Stanley & Co. Inc., (2007) 7 SCC 1] this Court had to consider whether an arrangement involving secondment, in the context of liability to income tax. The Court had observed : (SCC pp. 15-16, paras 17-18) “17. As regards the question of deputation, we are of the view that an employee of MSCo when deputed to MSAS does not become an employee of MSAS. A deputationist has a lien on his employment with MSCo. As long as the lien remains with MSCo the said company retains control over the deputationist's terms and employment. The concept of a service PE finds place in the UN Convention. It is constituted if the multinational enterprise renders services through its employees in India provided the services are rendered for a specified period. In this case, it extends to two years on the request of MSAS. It is important to note that where the activities of the multinational enterprise entails it being responsible for the work of deputationists and the employees continue to be on the payroll of the multinational enterprise or they continue to have their lien on their jobs with the multinational enterprise, a service PE can emerge.

Applying the above tests to the facts of this case we find that on request/requisition from MSAS the applicant deputes its staff. The request comes from MSAS depending upon its requirement. Generally, occasions do arise when MSAS needs the expertise of the staff of MSCo. In such circumstances, generally, MSAS makes a request to MSCo. A deputationist under such circumstances is expected to be experienced in banking and finance. On completion of his tenure he is repatriated to his parent job. He retains his lien when he comes to India. He lends his experience to MSAS in India as an employee of MSCo as he retains his lien.…”

In Eli Lilly [CIT v. Eli Lilly & Co. (India) (P) Ltd., (2009) 15 SCC 1] the appellant was incorporated in India under the NC: 2025:KHC:16149 Companies Act, 1956 and was a joint venture between M/s Eli Lilly, Netherlands B.V. and Ranbaxy Laboratories (Ltd.). The foreign partner had seconded four expatriates to the Indian joint venture. The employees, however, continued to remain on the rolls of the foreign company. They received home salary outside India from the foreign partner. The joint venture company deducted tax under Section 192(1) in respect of the salary paid by it to the expatriates in India, and did not deduct tax in respect of the home salary paid by the foreign company. This Court held that the provisions of the tax deduction at source (TDS) under the Income Tax Act, were applicable in relation to the salary paid by the foreign employer.

The CESTAT, in this case, relied on its previous rulings in Honeywell Technology Solutions Lab (P) Ltd. v. CST [Honeywell Technology Solutions Lab (P) Ltd. v. CST, (2022) 98 GSTR 232 : 2020 SCC OnLine CESTAT 2388] . It held that that the method of disbursement of salary cannot determine the nature of the transaction, based on the ruling in Volkswagen India (P) Ltd. v. CCE [Volkswagen India (P) Ltd. v. CCE, 2014 SCC OnLine CESTAT 4388 : (2014) 34 STR 135 (CESTAT)] which was affirmed by this Court by an order [Commr. v. Volkswagen India (P) Ltd., 2016 SCC OnLine SC 1959] . Another order, in Computer Sciences Corpn. India (P) Ltd. v. Commr. of Service Tax [Computer Sciences Corpn. India (P) Ltd. v. Commr. of Service Tax, 2014 SCC OnLine CESTAT 5210] similarly affirmed by this Court by another order, was relied on. NC: 2025:KHC:16149

Questions that have repeatedly arisen, in different contexts, and at different times, is whether the facts of a given case reveal, who is the employer, and whether the relationship between an employee and another, is one of master servant, or whether there is an underlying contract for service, by which the real employer, lends the services of his employee to another. In Dharangadhra Chemical Works Ltd. v. State of Saurashtra [Dharangadhra Chemical Works Ltd. v. State of Saurashtra, 1956 SCC OnLine SC 11 : 1957 SCR 152 : AIR 1957 SC 264] this Court observed as follows : (AIR p. 268, para 14) “14. The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at p. 23 in Mersey Docks & Harbour Board v. Coggins & Griffith (Liverpool) Ltd. [Mersey Docks & Harbour Board v. Coggins & Griffith (Liverpool) Ltd., 1947 AC 1 (HL)] , ‘The proper test is whether or not the hirer had authority to control the manner of execution of the act in question.’ ”

In D.C. Dewan Mohideen Sahib & Sons v. United Beedi Workers' Union [D.C. Dewan Mohideen Sahib & Sons v. United Beedi Workers' Union, 1964 SCC OnLine SC 283 : (1964) 7 SCR 646 : AIR 1966 SC 370] , the Court analysed the sample agreement which disclosed the facts of the case before it, and, for the first time, held that the “control” test is not necessarily determinative to discern the real employer : (AIR p. 375, para 12) “12. … There is in our opinion little doubt that this system has been evolved to avoid Regulations under the Factories Act. Further there is also no doubt from NC: 2025:KHC:16149 whatever terms of agreement are available on the record that the so-called independent contractors have really no independence at all. As the appeal court has pointed out they are impecunious persons who could hardly afford to have factories of their own. Some of them are even ex- employees of the appellants. The contract is practically one-sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so-called contractors having no right to insist upon the supply of raw materials to him. The so-called independent contractor is even bound not to employ more than nine persons in his so-called factory. The sale of raw materials to the so-called independent contractor and resale by him of the manufactured bidis is also a mere camouflage, the nature of which is apparent from the fact that the so-called contractor never paid for the materials. All that happens is that when the manufactured bidis are delivered by him to the appellants, amounts due for the so-called sale of raw materials is deducted from the so- called price fixed for the bidis. In effect all that happened is that the so-called independent contractor is supplied with tobacco and leaves and is paid certain amounts for the wages of the workers employed and for his own trouble. We can, therefore, see no difficulty in holding that the so-called contractor is merely an employee or an agent of the appellants as held by the appeal court and as such employee or agent he employs workers to roll bidis on behalf of the appellants. The work is distributed between a number of so-called independent contractors who are told not to employ more than nine persons at one place to avoid regulations under the Factories Act.”

In Silver Jubilee Tailoring House v. Chief Inspector of Shops & Establishments [Silver Jubilee Tailoring House v. Chief Inspector of Shops & Establishments, (1974) 3 SCC 498 : 1974 SCC (L&S) 31] this Court remarked how the test of control, or manner of performance of a task, by an employee by another is not conclusive to decide if an employer-employee relationship subsists : (SCC pp. 507- 508, paras 26-28) “26. … ‘This distinction (viz. between telling a servant what to do and telling him how to do it) was based upon the social conditions of an earlier age; it assumed that the NC: 2025:KHC:16149 employer of labour was able to direct and instruct the labourer as to the technical methods he should use in performing his work. In a mainly agricultural society and even in the earlier stages of the Industrial Revolution the master could be expected to be superior to the servant in the knowledge, skill and experience which had to be brought to bear upon the choice and handling of the tools. The control test was well suited to govern relationships like those between a farmer and an agricultural labourer (prior to agricultural mechanization) a craftsman and a journeyman, a householder and a domestic servant, and even a factory owner and an unskilled “hand”. It reflects a state of society in which the ownership of the means of production coincided with the profession of technical knowledge and skill in which that knowledge and skill was largely acquired by being handed down from one generation to the next by oral tradition and not by being systematically imparted in institutions of learning from universities down to technical schools. The control test postulates a combination of managerial and technical functions in the person of the employer i.e. what to modern eyes appears as an imperfect division of labour. [See Prof. Kahn-Freund in (1951) 14 Modern Law Review 505.] ’

It is, therefore, not surprising that in recent years the control test as traditionally formulated has not been treated as an exclusive test.

It is exceedingly doubtful today whether the search for a formula in the nature of a single test to tell a contract of service from a contract for service will serve any useful purpose. The most that profitably can be done is to examine all the factors that have been referred to in the cases on the topic. Clearly, not all of these factors would be relevant in all these cases or have the same weight in all cases. It is equally clear that no magic formula can be propounded, which factors should in any case be treated as determining ones. The plain fact is that in a large number of cases, the Court can only perform a balancing operation weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction [See Atiyah, PS, Vicarious Liability in the Law of Torts, pp. 37-38.] ”

The ruling in Silver Jubilee [Silver Jubilee Tailoring House v. Chief Inspector of Shops & Establishments, (1974) 3 SCC 498 : 1974 SCC (L&S) 31] about the flexibility in NC: 2025:KHC:16149 regard to deciding the question of whether a contract is one for service or one of service, has been followed in other decisions, such as Indian Banks Assn. v. Workmen of Syndicate Bank [Indian Banks Assn. v. Workmen of Syndicate Bank, (2001) 3 SCC 36 : 2001 SCC (L&S) 504 : (2001) 1 SCR 1011] and Indian Overseas Bank v. Workmen [Indian Overseas Bank v. Workmen, (2006) 3 SCC 729 : 2006 SCC (L&S) 595] . The recent decision in Sushilaben Indravadan [Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151 : (2021) 3 SCC (Civ) 777 : (2021) 3 SCC (Cri) 118 : (2021) 2 SCC (L&S) 409] reviewed a large number of previous judgments, and observed that : (Sushilaben Indravadan case [Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151 : (2021) 3 SCC (Civ) 777 : (2021) 3 SCC (Cri) 118 : (2021) 2 SCC (L&S) 409] , SCC pp. 179-80, para 32) “32. A conspectus of all the aforesaid judgments would show that in a society which has moved away from being a simple agrarian society to a complex modern society in the computer age, the earlier simple test of control, whether or not actually exercised, has now yielded more complex tests in order to decide complex matters which would have factors both for and against the contract being a contract of service as against a contract for service. The early “control of the employer” test in the sense of controlling not just the work that is given but the manner in which it is to be done obviously breaks down when it comes to professionals who may be employed. A variety of cases come in between cases which are crystal clear — for example, a master in a school who is employed like other employees of the school and who gives music lessons as part of his employment, as against an independent professional piano player who gives music lessons to persons who visit her premises. Equally, a variety of cases arise between a ship's master, a chauffeur and a staff reporter, NC: 2025:KHC:16149 as against a ship's pilot, a taxi driver and a contributor to a newspaper, in order to determine whether the person employed could be said to be an employee or an independent professional. The control test, after moving away from actual control of when and how work is to be performed to the right to exercise control, is one in a series of factors which may lead to an answer on the facts of a case slotting such case either as a contract of service or a contract for service. The test as to whether the person employed is integrated into the employer's business or is a mere accessory thereof is another important test in order to determine on which side of the line the contract falls. The three-tier test laid down by some of the English judgments, namely, whether wage or other remuneration is paid by the employer; whether there is a sufficient degree of control by the employer and other factors would be a test elastic enough to apply to a large variety of cases. The test of who owns the assets with which the work is to be done and/or who ultimately makes a profit or a loss so that one may determine whether a business is being run for the employer or on one's own account, is another important test when it comes to work to be performed by independent contractors as against piece-rated labourers. Also, the economic reality test laid down by the U.S. decisions and the test of whether the employer has economic control over the workers' subsistence, skill and continued employment can also be applied when it comes to whether a particular worker works for himself or for his employer. The test laid down by the Privy Council in Lee Ting Sang v. Chung Chi-Keung [Lee Ting Sang v. Chung Chi-Keung, (1990) 2 AC 374 : (1990) 2 WLR 1173 (PC)] , namely, is the person who has engaged himself to perform services performing them as a person in business on his own account, is also an important test, this time from the point of view of the person employed, in order to arrive at the correct solution. No one test of universal application can ever yield the correct result. It is a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight. Ultimately, the Court can only perform a balancing act weighing all relevant factors which point in one direction as against NC: 2025:KHC:16149 those which point in the opposite direction to arrive at the correct conclusion on the facts of each case.”

The assessee's contention before CESTAT, inter alia, was that apart from it having control over the nature of work of the seconded employees, no consideration was charged by the foreign entities from it for providing the supply of manpower as the Revenue alleged.

A plain reading of the definition of “manpower recruitment agency” [per Section 65(68) of the unamended Act] requires that to fall within that description, (a) a person [the expression is not defined; however, by Section 3(42) of the General Clauses Act, the term includes “any company or association or body of individuals whether incorporated or not”]; (b) provides service, (c) directly or indirectly, (d) in any manner for recruitment or supply of manpower, (e) temporarily or otherwise.

The question is what are the services provided to the assessee, and by whom? Do they include the provision of services, through employees, by its overseas group companies or affiliates? After 1-7-2012, the definition of “service” underwent a change. Except listed categories of activities excluded from, or kept out of the fold of the definition, every activity virtually is “service”. Now, by Section 65(44), “service” means: (a) any activity, (b) carried out by a person for another, (c) for consideration, and NC: 2025:KHC:16149 (d) includes a declared service (the term “declared service” is defined in Section 66-E).

Section 65(44), however, excludes from its sweep [by clause (b)], “a provision of service by an employee to the employer in the course of or in relation to his employment”. The assessee contends that the secondment agreement has the effect of placing the overseas employees under its control, so to say, and enables it to require them to perform the tasks for its purposes. It emphasises that the real nature of the relationship between it and the seconded employees is of employer and employee, and outside the purview of the service tax regime.

From the above discussion, it is evident, that prior to July 2012, what had to be seen was whether a (a) person provided service, (b) directly or indirectly, (c) in any manner for recruitment or supply of manpower, (d) temporarily or otherwise. After the amendment, all activities carried out by one person for another, for a consideration, are deemed services, except certain specified excluded categories. One of the excluded category is the provision of service by an employee to the employer in relation to his employment.

One of the cardinal principles of interpretation of documents, is that the nomenclature of any contract, or document, is not decisive of its nature. An overall reading of the document, and its effect, is to be seen by the courts. Thus, in State of Orissa v. Titaghur Paper Mills Co. Ltd. [State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280] it was held as follows : (SCC p. 371, para 120) NC: 2025:KHC:16149 “120. It is true that the nomenclature and description given to a contract is not determinative of the real nature of the document or of the transaction thereunder. These, however, have to be determined from all the terms and clauses of the document and all the rights and results flowing therefrom and not by picking and choosing certain clauses and the ultimate effect or result as the Court did in the Orient Paper Mills case [State of M.P. v. Orient Paper Mills Ltd., (1977) 2 SCC 77] .” This principle was reiterated in Prakash Roadlines (P) Ltd. v. Oriental Fire & General Insurance Co. Ltd. [Prakash Roadlines (P) Ltd. v. Oriental Fire & General Insurance Co. Ltd., (2000) 10 SCC 64]”

The task of this Court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided — in that context — by the overseas group company to the assessee.

A co-joint reading of the documents on record show that: (i) Attachment 1 to the service agreement ensures that the overseas group company assigns, inter alia, certain tasks to the assessee, including back office operations of a certain kind, in relation to its activities, or that of other group companies or entities. (ii) The assessee is paid a mark up of 15% of the overall expenditure it incurs, by the overseas company (Clause 2, read with Attachment 1 of the Service Agreement). (iii) By the Secondment Agreement, the parties agree that the overseas employee is temporarily loaned to the assessee (Article I read with the Schedule). (iv) During the period of secondment, the assessee has control over the employee i.e. it can require the seconded NC: 2025:KHC:16149 employee to return, and likewise, the employee has the discretion to terminate the relationship (Article II). (v) The overseas employer (group company) pays the seconded employee, which is reimbursed to the overseas company, by the assessee (Article III). (vi) The assessee is responsible for the work of the seconded employee i.e. the overseas employer, during the secondment period, is absolved of any liability for the job or work of its seconded employees (Article VII). (vii) The secondment is for a specified duration, and the employment with the assessee ceases upon the expiration of that period (Article II of the secondment agreement and the “duration” clause in the letter of understanding with the seconded employee). (viii) The letter of understanding issued to the seconded employee specifies that the tenure with the assessee is an assignment (in one place, the term used is “At its conclusion, repatriation will be in accordance with the Global Mobility Repatriation Policy”). (ix) The terms include the salary payable as well as other allowances, such as hardship allowance, vehicle allowance, servant allowance, paid leave, housing allowance, etc. The nature of salary and other perks underscore the fact that the seconded employees are of a certain skill and possess the expertise, which the assessee requires.

The above features show that the assessee had operational or functional control over the seconded employees; it was potentially liable for the performance of NC: 2025:KHC:16149 the tasks assigned to them. That it paid (through reimbursement) the amounts equivalent to the salaries of the seconded employees — because of the obligation of the overseas employer to maintain them on its payroll, has two consequences : one, that the seconded employees continued on the rolls of the overseas employer; two, since they were not performing jobs in relation to that employer's business, but that of the assessee, the latter had to ultimately bear the burden. There is nothing unusual in this arrangement, given that the seconded employees were performing the tasks relating to the assessee's activities and not in relation to the overseas employer. To put it differently, it would be unnatural to expect the overseas employer to not seek reimbursement of the employees' salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business.

As discussed previously, there is not one single determinative factor, which the courts give primacy to, while deciding whether an arrangement is a contract of service (as the assessee asserts the arrangement to be) or a contract for service. The general drift of cases which have been decided, are in the context of facts, where the employer usually argues that the person claiming to be the employee is an intermediary. This Court has consistently applied one test : substance over form, requiring a close look at the terms of the contract, or the agreements.

A vital fact which is to be considered in this case, is that the nature of the overseas group companies business appears to be to secure contracts, which can be performed NC: 2025:KHC:16149 by its highly trained and skilled personnel. This business is providing certain specialised services (back office, IT, bank related services, inventories, etc.). Taking advantage of the globalised economy, and having regard to locational advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimise the economic edge (be it manpower or other resources availability) to perform the specific tasks given it, by the overseas company. As part of this agreement, a secondment contract is entered into, whereby the overseas company's employee or employees, possessing the specific required skill, are deployed for the duration the task is estimated to be completed in. This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the purpose of completion of the assessee's job, amounts to manpower supply.

Facially, or to put it differently, for all appearances, the seconded employee, for the duration of her or his secondment, is under the control of the assessee, and works under its direction. Yet, the fact remains that they are on the pay rolls of their overseas employer. What is left unsaid— and perhaps crucial, is that this is a legal requirement, since they are entitled to social security benefits in the country of their origin. It is doubtful whether without the comfort of this assurance, they would agree to the secondment. Furthermore, the reality is that the secondment is a part of the global policy — of the overseas employer loaning their services, on temporary basis. On the cessation of the NC: 2025:KHC:16149 secondment period, they have to be repatriated in accordance with a global repatriation policy (of the overseas entity).

The letter of understanding between the assessee and the seconded employee nowhere states that the latter would be treated as the former's employees after the seconded period (which is usually 12-18 months). On the contrary, they revert to their overseas employer and may in fact, be sent elsewhere on secondment. The salary package, with allowances, etc. are all expressed in foreign currency (e.g. US $3,30,000 per annum in the letter produced before court, extracted above). Furthermore, the allowances include a separate hardship allowance of 20% of the basic salary for working in India. The monthly housing allowance in the specific case was Rs 3,66,700. In addition, an annual utility allowance of Rs 3,97,500 is also assured. These are substantial amounts, and could have been only by resorting to a standardised policy, of the overseas employer.

The overall effect of the four agreements entered into by the assessee, at various periods, with NTS or other group companies, clearly points to the fact that the overseas company has a pool of highly skilled employees, who are entitled to a certain salary structure—as well as social security benefits. These employees, having regard to their expertise and specialisation, are seconded (a term synonymous with the commonly used term in India, deputation) to the local municipal entity concerned (in this case, the assessee) for the use of their skills. Upon the cessation of the term of secondment, they return to their NC: 2025:KHC:16149 overseas employer, or are deployed on some other secondment.

This Court, upon a review of the previous judgment in Sushilaben Indravadan [Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151 : (2021) 3 SCC (Civ) 777 : (2021) 3 SCC (Cri) 118 : (2021) 2 SCC (L&S) 409] held that there is no one single determinative test, but that what is applicable is:

This decision was followed in Uniworth Textiles Ltd. v. CCE [Uniworth Textiles Ltd. v. CCE, (2013) 9 SCC 753] wherein it was observed that : (SCC p. 762, para 12) “[t]he conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is “untenable”.” This view was also followed in Escorts Ltd. v. CCE [Escorts Ltd. v. CCE, (2015) 9 SCC 109] , Commr. of Customs v. Magus Metals (P) Ltd. [Commr. of Customs v. Magus Metals (P) Ltd., (2017) 16 SCC 491 : (2018) 2 SCC (Cri) 201] and other judgments.

The fact that CESTAT in the present case, relied upon two of its previous orders, which were pressed into service, and also that in the present case itself, the Revenue discharged the later two show-cause notices, evidences that the view held by the assessee about its liability was neither untenable, nor mala fide. This is sufficient to turn down the Revenue's contention about the existence of “wilful suppression” of facts, or deliberate misstatement. For these reasons, the Revenue was not justified in invoking the extended period of limitation to fasten liability on the assessee. Conclusions

It is held, for the foregoing reasons, that the assessee was the service recipient for service (of manpower recruitment and supply services) by the overseas entity, in regard to the employees it seconded to the assessee, for the duration of their deputation or secondment. Furthermore, in view of the above discussion, the invocation of the extended NC: 2025:KHC:16149 period of limitation in both cases, by the Revenue is not tenable.

In light of the above, the Revenue's appeals succeed in part; the assessee is liable to pay service tax for the periods spelt out in the SCNs. However, the invocation of the extended period of limitation, in this Court's opinion, was unjustified and unreasonable. Resultantly, the assessee is held liable to discharge its service tax liability for the normal period or periods, covered by the four SCNs issued to it. The consequential demands therefore, shall be recovered from the assessee.

The impugned common order [Northern Operating Systems (P) Ltd. v. CCE & Service Tax, (2022) 98 GSTR 238 : 2020 SCC OnLine CESTAT 401] of CESTAT is accordingly set aside. The Commissioner's orders-in-original are accordingly restored, except to the extent they seek to recover amounts for the extended period of limitation. The demand against the assessee, for the two separate periods, shall now be modified, excluding any liability for the extended period of limitation. The appeals are partly allowed, to the above extent, with no order on costs.

The Appeals partly allowed, to the above extent, with no order on costs.

The respondent placed reliance upon Notification No.4/2019-Integrated Tax dated 30.09.2019 wherein the Government had specified the place of supply of services related to Research and Development (R & D) activities by pharmaceutical NC: 2025:KHC:16149 companies. In this context, it is relevant to state that the nature of services provided by the petitioner differs significantly from those covered under the Notification and petitioner provides services to a medical equipment company and is not involved in pharmaceutical industry. In the impugned show cause notices assailed in W.P.No.3689/2024 and W.P.No.21146/2024, respondent refers to Entry No.1 of Table-A of the aforesaid Notification, the relevant portion of which reads as under:- Table A Sl. No. Description of services or Circumstances Place of Supply (1) (2) (3)

It is relevant to state that the impugned Show Cause Notices refer to Entry No. 1 of Table B under the heading "Integrated Discovery and Development." The general description of the supply for this entry, as listed in column (3) of Table B, is reproduced as follows:–

It is therefore clear that the impugned show cause notices, is an attempt to classify the export of services as a domestic supply by equating the following two services as being NC: 2025:KHC:16149 similar, which is erroneous, since the same are clearly different and distinct as be seen hereunder:

It is borne out from the material on record that the description of supply under the heading "Integrated discovery and development" is not applicable to the services provided by the petitioner; so also, the petitioner's services have no connection to molecule development for medicinal use or the toxicology impact of drugs; instead, the petitioner focuses on improving the technological aspects of software programs installed in medical equipment, enhancing the functionality of these devices.

The material on record discloses that the Revisionary Notice in GST RVN-01 dated 05.10.2023 issued by the respondent, annexed as Annexure-Q1 vide I.A.No.1/2024, the respondent has NC: 2025:KHC:16149 denied the benefit of Notification No.04/2019 - Integrated Tax dated 30.09.2019, pertaining to the supply of research and development service related to the pharmaceutical sector, on the ground that the place of supply of service is within the territory of India, which does not fulfil the conditions under Section 2(6) of the IGST Act. However, the objections filed by the respondent states that Notification No. 04/2019 dated 30.09.2019 is solely applicable to the pharmaceutical industry, and since the petitioner does not fall under the said category, the said Notification shall not be applicable to the petitioner. It is therefore clear that the respondent is adopting a contradictory stance merely to deprive the petitioner of refund of unutilized credit pertaining to export of service.

A perusal of the aforesaid Notification will indicate that the place of supply of service should be the place of effective use and enjoyment of service. In the present case, the place of supply and enjoyment of service is outside the territory of India. The services provided by the petitioner relating to engineering services which are used by the Foreign Entity. Thus, it is clear that the effective use of the services is outside India which would entail that the place of supply is at the location of the recipient of service, i.e., NC: 2025:KHC:16149 outside India. To put it differently, the circular is actually in favour of the petitioner. It is therefore clear that though the petitioner never placed reliance on the said Notification without prejudice the effective use of services being outside India, the place of supply shall be the location of the recipient of service, i.e., outside India.

A perusal of the impugned order will indicate that the expenses incurred by the petitioner have been cross-charged to the foreign affiliates, which would indicate that the parties are mere establishments of a distinct person. It is contended that this issue is raised since the invoices raised towards export of services, submitted during the adjudication were termed as ‘Non-INR cross charge’. It is seen that during the adjudication, the respondent sought for details pertaining to export of services for the month of October, November and December, 2021 and the petitioner submitted sample invoices pertaining to the same. The said invoices had a description of “Non INR cross charge”. At this juncture, further clarification was sought by the respondent on the nature of activity undertaken against the said Invoices. In reply, an excel sheet was provided by the petitioner which detailed the description of the activity undertaken. With respect to many NC: 2025:KHC:16149 invoices, the description of the activity provided in the said excel sheet was as “service export”. Further, with respect to few invoices, specifically, Invoice No.KA/2122/I/041941 dated 22.09.2021, the petitioner provided a description as “Non INR Cross Charge”. It was also clarified by the petitioner that the charges were for employee education, training, and compensation and benefits (C&B) expenses, which were incurred as part of the R & D services provided by the petitioner to its foreign affiliates.

It is contended that the respondent interpreted all services provided by the petitioner as services rendered in India, applying this reasoning provided for a few invoices which stated ‘Employee training, C & B charges etc.,’ against all the export invoices. In addition, the primary activity undertaken is provision of research and development services and the associated costs for compensation, benefits, and employee education and training are ancillary to the R&D services. The said services provided is in the nature of a composite supply with the research and development services being the principal supply and the remaining services of employee education and training, being an ancillary service. Therefore, these costs in addition to the same NC: 2025:KHC:16149 should be considered as an ancillary service and the main supply as research and development service. In this regard, the petitioner placed reliance on Circular No.118/37/2019 GST dated 11.10.2019, which provides clarification on the definition of "export of services."

The aforesaid Circular addresses requests from the trade and industry, specifically from the Electronics Semiconductor and Design Manufacturing (E M) sector for clarification on the place of supply in cases, where software or design services are provided by suppliers in taxable territories to recipients in non- taxable territories, using hardware kits provided by the recipient. Further, the aforesaid Circular also indicate that many companies in the E M industry in India develop software and design integrated circuits for overseas customers. These customers provide design requirements and Intellectual Property (IP) blocks electronically, which the Indian companies use to develop software and hardware designs. These designs are then sent electronically to the customer or to a manufacturing facility for production. Sometimes, prototype hardware is sent back to the Indian NC: 2025:KHC:16149 companies for testing and validation to ensure the software and design are error-free.

In support of the aforesaid Circular, the Board clarified that in composite contracts involving software development and integrated circuit design, testing of software on prototype hardware is an ancillary supply with software development being the principal supply. The testing is part of the larger service and should not be treated as a separate supply. It is further contended that the Invoices need to be appreciated in accordance with the Collaboration Agreement dated 01.01.2029 between the petitioner and the foreign affiliates which clearly states that any funding provided by the foreign entity to the petitioner is a reimbursement for services such as the design, development, and implementation of new technology. The relevant portion of the Collaboration Agreement, reads as under:- 1.8 any funding which GE healthcare provides to the collaborator under this Annex is a reimbursement to Collaborator for the services, that is to say the design, development and implementation of the new Technology, which the collaborator shall render to GE Healthcare. The reimbursement shall be made even if the resultant New Technology is not commercially exploitable or exploited by NC: 2025:KHC:16149 GE Healthcare. Provided always that no reimbursement shall be made unless Collaborator has obtained all relevant Indian Government approval for making royalty payment to GE Healthcare.

It is therefore clear that by applying the general test of ‘substance over form’, irrespective of the nomenclature used in the invoice, the facts of the case show that the transaction is an export of service. Therefore, the place of supply for such composite services is the location of the service recipient as per Section 13(2) of the IGST Act i.e., the location of the foreign entity in the present case.

Insofar as W.P.No.3689/2024 and W.P.No.21146/2024, the respondent issued Show Cause Notices for the period 2018-19 and 2019-20 respectively, proposing to reject the refund previously sanctioned. The refund was proposed to be rejected on the ground that since the services provided by the petitioner were rendered to its branch in Goa, the services are classifiable as domestic rather than as an export. The material on record including the documents outlining the locations of the place of the business of the petitioner discloses that the petitioner do not have any branch nor do they provide services to any company in Goa as claimed by the NC: 2025:KHC:16149 respondent. It is therefore clear that the claim of the respondent with regard to the petitioner providing services to their own company in Goa is unsubstantiated and hence, the impugned show cause notice is liable to be quashed.

Further, with regard to the contention of the petitioner that the respondent - Revenue had previously examined the nature of the services provided by the petitioner and granted refund considering the same to be export of services, despite no changes in the petitioner’s operational methods or the applicable legal framework, the respondent has arbitrarily treated these services as domestic rather than export. In this context, in Genpact (1)’s case supra, the Hon’ble Division Bench of Punjab and Haryana Court held as under:-

The petitioner is registered with Haryana GST Authorities and is involved in providing a host of services collectively referred as BPO Services to customers located in India as well as outside India. An illustrative list of services stated to be rendered by the petitioner is as under : (i) Maintaining vendor/customer master data, scanning and processing vendor invoices, book-keeping, preparing/finalizing books of account, generating ledger reconciliations, managing customer receivables, etc. NC: 2025:KHC:16149 (ii) Developing, licensing and maintaining software as per clients' needs. (iii) Technical IT support, i. e., trouble-shooting services. (iv) Data analysis and providing solutions to clients in respect of forecasting of demand for their offerings and management of inventory, supporting various business functions like sourcing and supply chain management.

It is asserted that aforesaid services are actually deliverables of the petitioner on its "own account". Such services are provided by the petitioner from India remotely through telecommunication/internet links using its own infrastructure and work force of approximately 50 thousand employees.

The petitioner entered into a Master Services Sub- Contracting Agreement dated January 1, 2013 (hereinafter referred to as MSA) with Genpact International Incorporated (GI) an entity located outside India. It is asserted that as per terms of the MSA various services are to be provided by the petitioner on a principal to principal basis. Further the petitioner is engaged by GI for actual performance of BPO services to the clients of GI located outside India. The arrangement requires the petitioner to complete the assigned processes/scope of work directly to the third parties located outside India. Copy of the MSA entered between the petitioner and GI stands annexed as annexure P1 along with the petition.

We have heard counsel for the parties at length and have perused the pleadings on record. NC: 2025:KHC:16149

The primary issue that arises for consideration is as to whether the petitioner would be covered under the expression "intermediary" as defined under the provisions of the IGST Act and consequently the BPO services rendered by the petitioner under the MSA (annexure P1) be treated as "intermediary services" ?

For adjudication of such issue it would be necessary to advert to certain relevant statutory provisions : Integrated Goods and Services tax Act, 2017 S.

Definitions.—In this Act, unless the context otherwise requires :— (1) to (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 ;.. .. S.

Place of supply of services where location of supplier or location of recipient is outside India.—(1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. NC: 2025:KHC:16149 (2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services : Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. (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 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 of services or a person acting on behalf of the recipient, which require the physical presence of the recipient NC: 2025:KHC:16149 or the person acting on his behalf, with the supplier for the supply of services. (4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or coordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located. (5) The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held. (6) Where any services referred to in sub-section (3) or sub- section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory. (7) Where the services referred to in sub-section (3) or sub- section (4) or sub-section (5) are supplied in more than one State or Union territory, the place of supply of such services shall be taken as being in each of the respective States or Union territories and the value of such supplies specific to each State or Union territory shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard NC: 2025:KHC:16149 or, in the absence of such contract or agreement, on such other basis as may be prescribed. (8) The place of supply of the following services shall be the location of the supplier of services, namely :-- (a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders ; (b) intermediary services ; (c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month. Explanation.—For the purposes of this sub-section, the expression,— (a) 'account' means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account ; (b) 'banking company' shall have the same meaning as assigned to it under clause (a) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934) ; (c) 'financial institution' shall have the same meaning as assigned to it in clause (c) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) ; (d) 'non-banking financial company' means,-- (i) a financial institution which is a company ; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner ; or NC: 2025:KHC:16149 (iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. (9) The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods. (10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey. (11) The place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the First Scheduled point of departure of that conveyance for the journey. (12) The place of supply of online information and database access or retrieval services shall be the location of the recipient of services. Explanation.--For the purposes of this sub-section, person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied, namely :— (a) the location of address presented by the recipient of services through internet is in the taxable territory ; (b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of NC: 2025:KHC:16149 services settles payment has been issued in the taxable territory ; (c) the billing address of the recipient of services is in the taxable territory ; (d) the internet protocol address of the device used by the recipient of services is in the taxable territory ; (e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory ; (f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory ; (g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory. (13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.. .. . S.

Zero-rated supply.—(1) 'zero rated supply' means any of the following supplies of goods or services or both, namely :-- (a) export of goods or services or both ; or (b) supply of goods or services or both for authorised operations] to a special economic zone developer or a special economic zone unit. (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. NC: 2025:KHC:16149 (3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input-tax credit on supply of goods or services or both, without payment of integrated tax, under bond or letter of undertaking, in accordance with the provisions of section 54 of the Central Goods and Services tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed : Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub- section along with the applicable interest under section 50 of the Central Goods and Services tax Act within thirty days after the expiry of the time limited prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999) for receipt of foreign exchange remittances, in such manner as may be prescribed. (4) The Government may, on the recommendation of the council, and subject to such conditions, safeguards and procedures, by notification, specify— (i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid ; (ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid." Central Goods and Services tax Act, 2017 "S.

Definitions.—In this Act, unless the context otherwise requires,— NC: 2025:KHC:16149 (1) to (4). .. (5) 'agent' means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another ; (6) to (121). .. S.

Refund of tax.—(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed : Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in [such form and] manner as may be prescribed. (2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of [two years] from the last day of the quarter in which such supply was received. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input-tax credit at the end of any tax period : NC: 2025:KHC:16149 Provided that no refund of unutilised input tax credit shall be allowed in cases other than— (i) zero rated supplies made without payment of tax ; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the council : Provided further that no refund of unutilised input-tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty : Provided also that no refund of input-tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. (4) to (14). . ."

Section 2(6) of the IGST Act lays down the conditions which need to be fulfilled for qualification of a service as "export of services". A conjoint reading of section 13(2) and section 13(8) clarifies the manner for determining the place of supply of services where location of supplier or location of recipient is outside India. Generally, "place of supply" of services is the location of the recipient, except in case of certain specified services. For "intermediary" services, the place of supply is the location of the supplier. section 16(1)(a) inter alia provides that the export of services amount to "zero rated supply". Section 16(2) provides that credit of input tax may be availed for making zero rated supplies. NC: 2025:KHC:16149 Section 54 of the CGST Act prescribes the manner in relation to claiming refund by taxpayers, mainly covering the eligibility and prescribed time-lines for filing the refund claim application. A tax payer engaged in export of services without payment of GST is eligible to claim refund of unutilized input-tax credit.

We have examined the MSA (annexure P1) in depth and which was imperative to take a view as regards the findings recorded in the impugned order dated February 15, 2021 (annexure P18). In para 16 of the impugned order the recitals of the MSA dated January 7, 2013 (annexure P1) as also certain clauses have been referred to while concluding the petitioner to be an "intermediary". The relevant extract of the recitals and the clauses in question read as follows : Master Services Sub-contracting Agreement between Genpact International, Inc., and Genpact India Recitals Whereas, GI is in the business of providing business process outsourcing and information technology services to its customers (each a "GI Customer," and, collectively, the "GI Customers" ) and establishing, maintaining and expanding mutually beneficial relationships with such GI Customers. Whereas, provider is an affiliates of GI and has agreed to act as non-exclusive subcontractor for GI, subject to, and in accordance with, the terms of this agreement ; NC: 2025:KHC:16149 Whereas, GI intends to appoint the provider or any of them as its sub-contractor(s) to perform certain of these business process outsourcing and information technology services on behalf of GI for the GI customers, as may be appropriate, from time to time ; Whereas, provider shall have the opportunity to accept or reject any such proposed appointment by GI in its sole discretion, subject to the terms of this agreement ; Whereas, each provider agrees that, in the event it shall have agreed to accept any such appointment by GI, to perform its obligations in a manner and at a level that satisfies in all respects GI's obligations to the relevant GI customers, as set forth in the agreements and statements of work (each, a "Customer Statement of Work") entered into from time to time between GI and the GI Customers (collectively, the "GI Customer Agreements"). Whereas the provider acknowledges that upon such acceptance to perform services for GI, customer statement of work terms on performance standards, indemnities, liabilities and other operating terms, excepting pricing under each customer statement of work will be applicable by reference to all services to be performed by the provider under this agreement. Whereas, GI will have continuing responsibility for obtaining new GI customers and managing and expanding its relationships with existing GI customers, for the benefit of the provider and other similarly situated affiliates of GI (the "Other GI Provider Affiliates") who also provide services to NC: 2025:KHC:16149 GI in satisfaction of GI's obligations to the GI Customers under the GI customer agreements ; Now, therefore, in consideration of the foregoing and the mutual promises herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows : Article 3 GI'S obligations and services In addition to any other obligations set forth below in this agreement, GI shall be obligated to provide the following services :

1 Managing new and existing customer relationships, GI shall be responsible for performing all functions necessary to obtain new GI customers for whom services shall be performed by the provider and by the other GI provider affiliates and for maintaining and expanding all existing GI customer relationships. Such functions shall include, but not be limited to, scheduling regular meetings with existing and potential GI customers ; developing presentations for GI customers on existing and new product and service offerings ; preparation for, and attendance at, appropriate conventions and industry meetings ; handling all public relations and advertising matters, etc.

2 GI account representatives. GI shall at all times have one or more specific senior personnel identified and appointed to serve each GI Customer (each, a "GI Account Representative") who shall be responsible for managing the relationship with each GI customer to whom they are assigned. GI and the applicable GI account representatives shall also be responsible for determining which providers NC: 2025:KHC:16149 and/or other GI provider affiliate(s) shall be assigned to perform services for each GI customer as per GI customer requirements (in consultation with the relevant providers and other GI provider affiliates) and for balancing to the extent feasible, the allocation of services among the providers and other GI provider affiliates so that each GI affiliate is providing Services in accordance with its capacity and capabilities. The GI account representatives for each customer shall also (a) be the primary contact for the providers in dealing with the respective GI customer under this agreement, (b) have overall responsibility for managing and co-ordinating the receipt of the services for such GI customer, (c) interact regularly with the provider account representative (as hereinafter defined) and (d) have the authority to make decisions with respect to actions to be taken by GI in the ordinary course of day-to-day management of GI's receipt of the services. 3.3. ..

4 Customer invoicing and collection. GI shall be responsible for processing all invoices rendered to GI customers, in the form required by each GI customer, as set forth in the relevant customer agreement, and for handling all disputes with GI customers. Notwithstanding the foregoing, it shall be the responsibility of each Provider to furnish GI with all financial data and other support as may be necessary in order for GI to render invoices to GI customers with respect to services provided by the provider. Article 4 Personal data processing NC: 2025:KHC:16149

1 Personal data. In performance of this agreement, each provider may have access to, or otherwise process, GI customer personal data on a GI customer's behalf. GI customer personal data will be accessed and otherwise processed by each provider only to the extent strictly necessary to perform this agreement, or upon GI's written instructions and in strict compliance thereof.

2 Data protection (a) Notwithstanding anything in article 11 (confidentiality) to the contrary, each Provider agrees to keep the GI customer personal data confidential, and agrees to not disclose any GI customer personal data to third parties without having first received express written approval from the GI customer and GI and, if required by applicable law, the applicable data subject. All provider personnel with process GI customer personal data only on a need-to-know basis in connection with the performance of this agreement. Article 5 services

1 The customer agreement and customer statements of work are by reference incorporated into the terms of this agreement and standard operating procedures. (a) On or before the service commencement date for any customer statement of work, each provider shall deliver a draft of the standard operating procedures for the services which will be finalized and adopted by the provider. (b) Subject to the terms of this agreement, the parties shall comply at all times with the standard operating procedures. NC: 2025:KHC:16149 (c) Each provider shall update the standard operating procedures from time to time to reflect changes in the services being delivered.

2 Disaster recovery services. Provider shall provide to GI the disaster recovery assistance, co-operation and services, if any, that are relevant. Each provider shall be responsible for business continuity planning or disaster recovery to the extent set forth in a customer statement of work.

3 Reports. Each provider shall provide to GI, and directly to the GI customer, where so agreed, the reports set forth in the customer statements of work in accordance with the frequencies set forth therein.

4 Records retention.—Each provider shall retain applicable books and records in accordance with the records retention standards in accordance with law, or as required by GI or the GI customer, whichever is the longest. Article 7 service levels

1 General. The service levels mentioned in each customer statement of work shall be used to measure provider's performance (the "Service Levels"). For project based customer statement of work all the deliverables and the milestones or any other such measurement shall be used to measure the provider's progress with respect to completion of the applicable services. 7.2 and 7.3. ..

4 Measurement and monitoring tools. Provider shall implement its measurement and monitoring tools and procedures to measure and monitor its performance against the service levels in any given customer statement of work. NC: 2025:KHC:16149 Upon GI's reasonable request, provider shall provide GI with information and access to such measurement and monitoring tools and procedures for purposes of verification. Article 10 fees and payment terms

1 Service charges (a) The charges for services provided to GI by a provider during a particular calendar year with respect to each GI customer (the "Provider Service Fee") shall be invoiced to and paid for by GI to the provider at an amount equal to the excess of (i) over the sum of (ii), (iii) and (iv) below : (i) the amount invoiced to the GI customer for such services (as denominated in US Dollars), in accordance with such customer statements of work and customer agreements including amount invoiced for special projects/migration. (ii) (a) GI's fully-loaded costs in providing its services with respect to such GI customer, calculated in U. S. Dollars, as described in article 3 hereof and (b) GI's pass through costs including attributable to special projects/migration ((a) and (b) together referred to as "GI costs") (iii) Arms' length net margin to be retained by GI pursuant to an economic analysis in accordance with internationally accepted principles as agreed between the parties from time to time. (iv) Any adjustments made by GI for compensating the support region ((ii), (iii) and (iv) together referred to as "GI service fee"). Article 16 termination

1 Termination for cause. If a provider fails to perform any of its material obligations under this agreement or a customer statement of work and does not cure such failure NC: 2025:KHC:16149 within the cure period mentioned in such customer statement of work or where no such cure period is mentioned in a customer statement of work, within 30 days of receipt of a notice of default from GI, then GI may, by giving notice to the provider within 120 days (or such number of days as mutually agreed) of the last day of such cure period, terminate such customer statement of work as of the date specified in such notice of termination.

As per definition of "intermediary" under section 2(13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an "intermediary" ;— First, the relationship between the parties must be that of a principal- agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a third party. Third, the person must not actually perform the main service intended to be received by the service recipient itself. Scope of an "intermediary" is to mediate between two parties, i. e., the principal service provider (the 3rd party) and the beneficiary (the agents principal) who receives the main service and expressly excludes any person who provides such main service "on his own account".

A bare perusal of the recitals and relevant clauses of the MSA reproduced hereinabove do not in any manner indicate that petitioner is acting as an "intermediary" so as to fall within the scope and ambit of the definition of "intermediary" under section 2(13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the NC: 2025:KHC:16149 modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a third party to render the main service which has actually been rendered by the petitioner.

A perusal of the definition of "intermediary" under the service tax regime vis-a-vis the GST regime would show that the definition has remained similar. Even as per circular dated September 20, 2021 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (GST Policy Wing), the scope of "intermediary" services has been dealt in para 2 thereof. In para 2.2 it stands clarified that the concept of "intermediary" was borrowed in GST from the service tax regime. The circular after making a reference to the definition of "intermediary" both under rule 2(f) of the Place of Provision of Services Rules, 2012 and under section 2(13) of the IGST Act clearly states that there is broadly no change in the scope of "intermediary" services in the GST regime vis-a- vis the service tax regime except addition of supply of securities in the definition of "intermediary" in the GST law.

Pursuant to the sub-contracting arrangement as per MSA (annexure P1), the petitioner provides the main service directly to the overseas clients of GI but does not get any remuneration from such clients. Pursuant to the arrangement, it is GI which gets paid by its customers to whom the services are being provided directly by the petitioner. Nothing has been brought on record to show that the petitioner has a direct contract with the customers of GI. Still further there is nothing on record to show that the NC: 2025:KHC:16149 petitioner is liaisoning or acting as an "intermediary" between GI and its customers. All that is evident from the record is that the petitioner is providing the services which have been sub-contracted to it by GI. As a sub- contractor it is receiving fee/charges from the main contractor, i. e., GI for its services. The main contractor, i. e., GI in turn is receiving commission/ agents from its clients for the main services that are rendered by the petitioner pursuant to the arrangement of sub-contracting. Even as per the afore-noticed circular dated September 20, 2021 and in reference to para 3.5 it stands clarified that sub-contracting for a service is not an "intermediary" service.

The aforesaid judgment of the Punjab and Haryana High Court has attained finality as is clear from the subsequent judgment in Genpact (2)’s case supra, wherein the decision of the revenue / Department not to challenge the judgment in Genpact (1) before the Apex Court has been recorded as hereunder:- ‘CM-6621-CWP-2022: Application is allowed and rejoinder to reply filed by the respondents is taken on record.

CWP-14151-2021

The petitioner is seeking writ of certiorari for quashing and setting aside Demand cum Show cause Notice No. 47/GST/GGM/2020-21, dated 30-3-2021 (“impugned notice”) (Annexure P-29) issued by Principal Commissioner of GST & CX, Gurugram-respondent No. 1 under Sections 73 of the Finance Act, 1994 (“Act, 1994”) read with Section 174 of Central Goods & Services Tax Act, NC: 2025:KHC:16149 2017 (“CGST Act”) requiring the petitioner to explain why the extended period of limitation in terms of proviso to Section 73(1) of the Finance Act, 1994 should not be invoked for recovery of refund of Rs. 2,64,92,41,846/- granted to the petitioner.

The impugned notice further requires the petitioner to explain why service tax of Rs. 16,73,74,91,090/- should not be demanded and recovered from the petitioner.

On 30-7-2021, when notice of motion was issued, reference was made to CWP-6048-2021 titled as Genpact India (P) Ltd. v. Union of India, (2022) 1 Centax 226 (P & H) : (2023) 68 GSTL 3 (P & H) : (2022) 144 tax-mann.com 201/(2023) 95 GST 46 (Punj. & Har.), decided on 11-11-2022 in which notice had already been issued and was pending for consideration. In that writ petition, the petitioner had challenged order dated 15-2- 2021 whereby refund claim of un-utilized Input Tax Credit (ITC) used in making zero rated supplies of services under GST regime had been rejected. The main ground of the petitioner in that writ petition was that refunds had been granted to the petitioner consistently for all financial years starting from 2005- 2006 under the service tax regime and, therefore, on the principle of consistency, refunds under the GST regime should also be granted.

Learned Counsel for the petitioner had argued that impugned notice has been issued as a counterblast after filing of CWP- 6048-2021, for recovery of Rs. 26,34,61,625/- and the said amount should not be demanded from the petitioner.

Learned Counsel for the petitioner has stated that the judgment dated 11-11-2022 passed in CWP-6048-2021 fully covers the case of the petitioner as in that case, this NC: 2025:KHC:16149 Court, vide detailed judgment, held that the petitioner was not “intermediary” and, therefore, the refund claim of unutilized Input Tax Credit (ITC) used in making zero rated supplies of services without payment of IGST was allowed.

Learned Counsel for the petitioner has further stated that the respondents have implemented the judgment dated 11-11-2022 passed in CWP-6048-2021 by detailed order and also decided to file SLP in the Hon'ble Supreme Court. Finally refund for an amount of Rs. 21,98,06,002/- for the period April, 2019 to June, 2019 has been sanctioned by the Deputy Director Division East-II, Central Tax GST Gurugram. It is further stated therein that as per the letter dated 8-5-2023 issued by CBIC, the respondents have decided not to file SLP against the judgment dated 11-11-2022 passed in CWP-6048-2021. 9. Hence, this Court is of the view that since the respondents have taken conscious decision not to file SLP against the judgment dated 11-11-2022 passed in CWP-6048-2021, the ratio of Genpact India (P.) Ltd.'s case (supra) is directly applicable in this case.

Writ petition is allowed and notice dated 30-3-2021 (Annexure P-29) is set aside.

In view of the aforesaid facts and circumstances and in the light of the principles laid down in the aforesaid judgments, I am of the view that the impugned refund rejection order as well as impugned show cause notices in these writ petitions respectively are liable to be quashed. NC: 2025:KHC:16149

In the result, I pass the following: ORDER (i) W.P.No.7317/2023, and W.P.no.21146/2024 are hereby allowed; (ii) The impugned orders at Annexures-A, B and C dated 13.03.2023 in W.P.No.7317/2023 are hereby quashed. (iii) The impugned show cause Notice at Annexure-A dated 01.01.2024 in W.P.No.3689/2024 and the impugned show cause notice at Annexure-A dated 31.05.2024 in W.P.No.21146/2024 are hereby quashed. (iv) The concerned respondents are directed to grant and sanction the refund along with applicable interest in favour of the petitioner as expeditiously as possible and at any rate within a period of six weeks from the date of receipt of a copy of this order. (S.R.KRISHNA KUMAR) JUDGE