Savista Global Solutions Private LTD. vs. Union Of INDIA And Ors

Facts

The petitioner, Savista Global Solutions Private Limited, filed a writ petition challenging a show cause notice dated February 28, 2022, issued by respondent No. 2. The notice proposed recovery of a refund amounting to Rs. 2,61,26,080/- for the period July 2019 to December 2020, related to services exported outside India. Additionally, it proposed recovery of tax allegedly not paid, amounting to Rs. 4,97,94,585/-. The petitioner's claim was rejected on the grounds that its services were classified as 'intermediary' services, thus not qualifying as an export. The respondents, through an affidavit, submitted that the writ petition had become infructuous as the department was in the process of sanctioning refund claims in view of a prior decision in a connected matter.

Held

The Court disposed of the writ petition in terms of a previous decision dated April 24, 2023, in CWP No. 1933 of 2022 (Savista Global Solutions Pvt. Ltd. vs. Union of India and others). In that prior decision, it was held that the petitioner could not be classified as an intermediary and that the services provided by the petitioner qualified as an export of services. The Court noted that this prior decision had been accepted by the department and was in the process of implementation. Consequently, the show cause notice dated February 28, 2022, was set aside. The ratio decidendi is that if a prior High Court judgment, accepted by the department, has determined the nature of services and the eligibility for export benefits, subsequent show cause notices based on contrary grounds should be quashed.

Key Issues

1. Whether the services provided by the petitioner qualify as an export of services under the Goods and Services Tax (GST) law, or if they fall under the category of 'intermediary' services, thereby disentitling the petitioner from export benefits? This issue turns on the interpretation of provisions related to export of services and the definition of an intermediary. Petitioner's Contention: The petitioner argued that its services do not fall within the definition of 'intermediary' and therefore qualify as an export of services. Revenue's Contention: The revenue contended that the petitioner's services are those of an 'intermediary', and thus, the supply of these services does not constitute an export. This contention was based on the department's prior stance and the proposed recovery in the show cause notice. The revenue later submitted that the matter was rendered infructuous due to the department's decision to sanction refund claims in line with a previous High Court ruling.