BharatTaxGST

M/S.Harri Software Development And Solutions INDIA PVT. LTD. vs. Union Of INDIA

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WP/27918/2021HC TelanganaGSTCNR HBHC01043908202103 January 2022Bench: UJJAL BHUYAN,A.VENKATESHWARA REDDY6 pages
For Petitioner: SRl. KAILASH NATH P S SFor Respondent: SRI B' MUKHERJEE FOR SRl. NAMAVARAPU, RAJESHWAR RAO, ASGI

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Cause title — parties, addresses and appearances
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Originat Jurisdiction) MONDAY, THE THIRD DAY OF JANUARY TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE A.VENKATESHWARA REDDY WRIT PETITION NO: 27918 OF 2021 Between: I\rlls.Harri Software Development and Solutions lndia Pvt. Ltd., Plot No.54/A, Rukmunipuri Colony, AS Rao Nagar, ECIL Post, Hyderabad 500062 Rep. by its Director - Arvind Kumar lt4aheswaram ...PETITIONER AND 1. Union of lndia, Ministry of Finance, Dept. of Revenue Rep by Secretary, North Block, New Delhi 2. Joint Commissioner, (Appeals-ll), 7th Floor, GST Bhavan, LB Stadium Road, Basheerbagh, Hyderabad 500001 3. Deputy Commissioner of Central Tax, Uppal Division, 2nd Floor, Elegant Edifice, 3-4-11812 NR, Ramanthapur, Hyderabad 500013 4. Central Board of lndirect Taxes and Customs, Department of Revenue, Ministry of Finance ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased To issue a writ, order or direction, more appropriately in the nature of a Writ of Certiorari calling for the records and quashing the order of the 2nd Respondent dated 30.07.202'! bearing 0-l-A No.HYD-GST-IVD-AP2-022-21-22 d1.30.07 '2021 under the Central Goods and Services Tax Act, 2017, as being illegal, arbitrary, and violative of provisions of the Central Goods and Services Tax Act, 2017 and Articles 14 and 265 of the Constitution of lndia, and consequently direct the Respondents to issue refund of tax to the Petitioner of Rs.7,51,487 for the period September 2019 to August 2020 made vide ARN 44361020034138T on 31. 10 2020. IA NO: 10F 2021 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased To direct the 3rd Respondent to consider the application of the Petitioner made vide ARN 4A361020034138T on 31 .10.2020 in terms of Circular No. 16111712021-GST dL20.09 .2021 . Counsel for the Petitioner: SRl. KAILASH NATH P S S Counsel for the Respondent No.1: SRI B' MUKHERJEE FOR SRl. NAMAVARAPU RAJESHWAR RAO, ASGI Counsel for the Respondent No.2 to 4: SRl. B. NARASIMHA SARMA, SC for Central government

The Court made the following: ORDER

HONOURABLE SRI JUSTICE UJJAL BHUYAN AND HONOURABLE SRI JUSTI Ctr A,V ENKA'I'ESTIWARA RT]DDY Q![p!',i rr", r[(rt'hle Sti JL$ti(e Ljj tBhu\d / Heard Mr.Kailash Natb P S S, learned counsel fbr the petitioner; Mr.B.Mukherjee, leamed counsel appearing on behalf of leamed Assistant Solicitor General of India for respondent No.l/ Union of India; and Mr.B.Narasimha Sama, learned counsel lor respondent Nos. 2 to 4. 2. This writ petition has been filed under Article 226 of the Constitution of India for quashing of the order dated 30.07.2021 passed by respondent No.2 under the Central Goods and Services Tax Act, 2017 (brief1y, 'the CCST Act' hereinatter) as being itlegal and arbitrary. Petitioner further seeks a direction to the respondents to issue refund of excess tax collected from the petitioner to the extent of Rs.7,5 1,487.00 for the period from September, 2019 to August, 2020. 3. The controversy in question was summed up in our order dated 08.11.2021 when we had issued notice. Relevant portion of the order dated 08. 1 I .2021 reads as under: Petitioner's claim for refund of Input Tax Credit was rejected by 3'd respondent, and affirmed by 2nd respondent in appeal on the ground that the holding overseas company of the petitioner was an overseas branch, and that servlces provided by the petitioner to the overseas branch would not be eligible as "Export of Services". W.P.No.27918 OF 2021 \

I 2 Learned counsel for the petitioner submits that Central Board of Indirect Taxes and Customs has clarified the position by issuing Circular dated 29'09'2021, whereby, such holding companles have been declared as separate persons under the Central Goods and Services Tax Act, 2017, and thus, are separate legal entities' He submits that if that be so, then petitioner's claim to refund is liable to be allowed".

4.

4 From the perusal of the definition of "person" under sub-section (84) of section 2 of the CGST Act' 2017 and the definitions of "company" and "foreign company" under Section 2 of the Companies Act, 2013, it is observed that a r o se rate I G nd al entities. Thus, a subsidiary/sister concern/ group concern of any foreign company which is incorporated in India, then the said company incorporated in India will be considered as a separate "person" under the provisions of CGST Act and accordingly, would be considered as a separate legal entity than the foreign company.

5.

2 Therefore, supply of services by a subsidiary/sister concern/group concern, etc. of a foreign company' which is incorporated in India under the Companies Act' 2013 (and thus qualifies as a 'company' in India as per Companies Act), to the establishments of the said foreign company Iocated outside india (incorporated outside India), would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act' 2017 for being considered as expott of services, as it would not be treated as supply between merely establishments of 4. Learned counsel for the petitioner has relied upon the circular dated 20.09.2021 issued by the Central Board of Direct Taxes and Customs (page 68 ofthe paper book)' Paragraphs 4'4 and 5'2 ofthe said circular are relevant and those are extracted hereunder: \

l distinct persons under Explanation 1 of section 8 of IGST Act, 2017 Similarly, the supply from a company incorporated in India to its related establishments outside India, which are incorporated under the laws outside India, would not be treated as supply to merely establishments of distinct person under Explanation 1 of section 8 of IGST Act, 2017. Such supplies, therefore, would qualify as 'export of services', subject to fulfilment of other conditions as provided under sub-section (6) of section 2 of IGST Act".

5.

Mr.Narasimha Sarma, learned counsel for respondent Nos'2 to 4 has referred to the counter affidavit filed by the said respondents and fairly submits that in view of the above circular, the matter may have to go back to the original authority for re-consideratioll. Relevant portion of the counter affidavit reads as under: "However, the present writ petition was filed by the claimant adverting to Circular No.l6ll 17 I 2021-GST dt' 20'09' 202 1 issued by Central Board of Indirect Taxes and Customs, GST Policy Wing, Depaftment of Revenue, Government of India' It may be seen that the said Circular was lssued on a date subsequent to the dates of issue of both the Orders-in-Original of the Deputy Commissioner dated 30.12.2020 and Order-in-Appeal of the loint Commissioner (Appeals,II) dated 20.07.2021' It is evident that the said circular was materially not in existence, to be taken cognizance of, when the said Orders were issued' However, it appears that it may be a case which requires re-consideration by the Original Authority in the light of the said Circular dated 20.09.2021 especially in terms of Para 4.4 therein, which is reproduced below: From the perusal of the definition of "person" under sub-section (84) of section 2 of the CGST Act, 2017 and the definitions of "company" and "foreign company" under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in lndia and a foreign company incorporaled outside

4 6. ln view of the above, we set aside the impugned order dated 30.0l .2O2l and remand the matter back to respondent No'3 for taking a fresh decision on the claim of refund made by the petitioner, having regard to the above circular dated 20.09.2021 . Let the above decision betakenwithirraperiodolsixweeksfromthedateolreceiptofa copy of this order after giving due notice and hearing to the petitioner' 1 . Writ petition is, accordingly, disposed of'

8.

Miscellaneous applications, if any pending, shall stand closed' .I.NAG ALAKSHMI ASSTSTANT REGIST R //// SECTION FFICER To, Secretary, Union of lndia' Ministry of Finance' Dept of Revenue' North Block' $f*t-fugg,1l;;j*,* .';i:"i:,=i* B# :Ei ffiffiHffi fff $lHF5*:8ts!bL''"' "'

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4.

( cl. 7 BI two CD CoPY . one Spare CoPY PB NPJ q lndia, are separate "person" under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a subsidiary/sister concern/group concern of any foreign company which is incorporated in lndia, then the said company incorporated in lndia will be considered as a separate "person" under the provisions of CGST Act and accordingly, would be considered as a separate legal entity than the foreign company'

9.

No costs.

HIGH COURT DATED: 0310112022 ORDER WP.No.27918 ot 2021 DISPOSING OF THE WRIT PETITION WITHOUT COSTS C9 (p?t4 .1; s TAf6: f,o ,.-.) 1 4 [F-B 2Sl2 rt * i: 2), ./ \ I .:_

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.