M/S Workplace Options Private Limited vs. Union Of INDIA
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Cause title — parties, addresses and appearances
ORDER The petitioner has sought for an appropriate order to declare that the impugned order dated 23.03.2020 at Annexure-'A' affirming the order passed by respondent No.2 at Annexure-'B' dated 17.07.2019 is illegal. The petitioner has also sought for quashing of the order at Annexures-'A' and 'B' to the extent of rejection of refunds pertaining to service activity. NC: 2023:KHC:25409
The petitioner is aggrieved by the orders of respondent Nos.1 and 2 in deducting refund of claim of Rs.66,68,794/- and the order of respondent No.3 in affirming the rejection of refund by respondent No.2. 3. Learned counsel for the petitioner submits that the petitioner had entered into a Intercompany Master Services Agreement dated 12.07.2015 to provide services to M/s.Workplace Options India Pvt. Ltd., which is situated outside India.
It is submitted that Clause-2 of the Agreement provides for remuneration of costs incurred by the petitioner for the services rendered to the Group Companies. It is asserted that the Intercompany Master Services Agreement provided for computation of direct and indirect costs with mark up of 20% that was permitted, which according to the petitioner would be the consideration for the services rendered to the Group Companies. The petitioner asserts that the Company is undisputedly involved in zero rated supply of services in NC: 2023:KHC:25409 terms of Section 16(1) of the Integrated Goods and Services Tax Act, 2017 ('IGST Act' for brevity).
The petitioner further asserts that during the month of December 2017, the Invoices/Debit Notes were missed to be reported in the GST returns and on identification of such error, the same was reported in the returns filed in the month of March 2018 and in light of such delay, interest was calculated and paid, while declaring the same in the returns for the month of March 2018. 6. It is submitted that the petitioner Company being an Exporter of Services was entitled in terms of Section 16(3) of IGST Act to supply and export without payment of tax and claim refund of Input Tax Credit which is accumulated on account of export or export with payment of output tax on its services and claim such refund of output tax paid on export of services. NC: 2023:KHC:25409
It is submitted that the petitioner had opted for the latter course. The petitioner has stated that the applications for refund of tax for the period of December 2017 under Section 16 of IGST Act and Section 54 of Central Goods and Services Tax Act, 2017 ('CGST Act' for brevity), was partially rejected and refund of Rs.66,68,794/- was not accepted on the ground that they were mere adjustment bills to make up the shortfall of petitioner Company and not towards any service activity.
The petitioner contends that though Show Cause Notice was replied to, the same has not been taken note of while rejecting the refund application.
As against the Order In Original, the appeal preferred by the petitioner Company was also rejected while upholding the rejection of refund. It is however contended by the petitioner that the appeal was also rejected on different grounds assigned by respondent No.2. NC: 2023:KHC:25409
Learned counsel appearing for the respondent- Revenue on the other hand would contend that the claim of petitioner has been disallowed on the ground that though they did not relate to December 2017 to March 2018 and that the fact as to whether services were rendered was also taken note of by the Authority. It is submitted that the matter may require clarity on the aspect as to whether services were actually rendered during December 2017 and it is only on such factual finding that the matter could be resolved.
It is submitted that such factual aspect is a matter that cannot be argued at this stage and the adjudication ought to be directed to be redone for recording of finding on that specific aspect.
After hearing both sides, it would narrow down to the determination as to whether services were rendered in December 2017, and the case of petitioner that it had omitted to raise Invoice during December 2017, which it has subsequently raised in March 2018 though for the NC: 2023:KHC:25409 services rendered in December 2017, requires to be re- looked into it and the finding recorded thereon. If the finding regarding rendering of services in December 2017 is recorded and Clause-2 of the Intercompany Master Services Agreement is taken note of and appropriate finding is given that would resolve the controversy.
Accordingly, the matter is remitted for fresh adjudication before respondent No.
The impugned orders dated 23.03.2020 at Annexure-'A' and Annexure-'B' dated 17.07.2019 are set aide. It is however, to be observed that the remand is being made with a specific direction to record a finding as noticed above. Any stand taken during the earlier proceedings which enures to the benefit of assessee cannot be retracted, while recording the adjudication in terms of the order. Accordingly, the petition is disposed off. JUDGE VGR
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.