A division bench of the Bombay High Court comprising Justice S.V. Gangapurwala & Justice M.G.Sewlikar has allowed a refund claim quashing the orders of the GST authorities by holding that GST is not applicable to services rendered outside India and the authorities could not establish that the incident of tax has been passed on to the recipient ASCL located in London.
The petitioner, M/s Jar Productions Private Limited, is a Company incorporated under the Company’s Act, 2013. The petitioner is engaged in providing production services to ‘A Suitable Company Ltd ’ located in London United Kingdom (U.K.). For the purpose for providing the said services, the petitioner has entered into an agreement dated 12th September, 2019 with ASCL effective from 28th March 2018. It is further alleged that Clause 4.10 of the agreement provides that if any refund of tax component is received by the petitioner, such amount shall be reduced from the production expenses i.e. while computing the consideration towards production services, the said amount of tax component received as refund will be deducted from the production expenses.
The GST department, however, rejected the refund claim of the petitioner by holding that the incidence of tax has been passed on to the client i.e. ASCL resulting in unjust enrichment of the petitioner.
Allowing the plea of the petitioner, the Court observed that “this court relying on the Apex court judgment held that when services are rendered abroad, CGST will not apply. In the case at hand also, the petitioner has rendered services to the ASCL abroad i.e. in U.K. Therefore, GST does not apply to the services rendered abroad as they amount to the export of services. In addition to that the respondent could not establish that the incident of tax has been passed on to the recipient ASCL located in London. Thus, both, the Adjudicating Authority and the Appellate Authority committed error in rejecting the refund of GST of the petitioner. Therefore, orders of both the authorities cannot be sustained and need to be set aside.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
