In a major relief to Vodafone Idea, a division bench of the Bombay High Court comprising Justices K. R. Shriram & Milind N. Jadhav has held that roaming services and international long-distance services provided by Vodafone Idea to the Foreign Telecom Operators is an Export Of Service for the purpose of the Integrated GST Act, 2017.
The bench was considering a writ petition regarding refund claim of the assessee-Company. The Company alleged that by virtue of the IIR and ILD services provided by it, a person traveling to a country outside of his usual place of residence (where he is a regular subscriber of a telecom service provider) wishes to use telecom services from the same service providers (who usually provide services to that person in his / her usual place of residence) with the same contact number, so that his / her connection with the outside world was not interrupted, to cater to such need, almost all telecom service providers have an agreement with the other telecom service providers in different countries / circles to provide telecom services to their customers when he / she is traveling to other country and vice versa. According to them, the services rendered are in the nature of telecom services by way of allowing to make international long-distance calls and roaming telecommunication services.
Allowing the above contention, the Court observed that “We would agree with the concept that customer’s customer cannot be your customer. In the case at hand customer of Vodafone Idea Limited is the FTO and the subscribers of FTO are the customers of FTO. When a service is rendered to a third party customer of FTO your customer, the service recipient is your customer and not the third party customer of FTO.”
“In our opinion, therefore Vodafone Idea Limited has provided services to FTOs and not to the individual subscribers of FTOs. Therefore Section 13(3)(b) is not attracted. Section 13(3)(b) on which reliance has been placed by the Deputy Commissioner is not applicable,” the Court said.
Perusing the provisions of Section 13(2) of the IGST, the Court held that 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. As discussed earlier, the recipients of the services is the FTO.
“We find that Vodafone Idea Limited has not supplied services specified in sub-sections (3) to (13) of Section 13. Therefore, the place of service or supply of service supplied by Vodafone Idea Limited is the location of recipient of the service, i.e., location of the FTO, which is outside India,” the Court said.
“The relationship between the FTO and the subscriber is on principal to principal basis and not on principal and agent basis. In this case, if the subscriber notices any deficiency in service he cannot talk directly to Vodafone Idea Ltd as representative of the FTO. The subscriber has to approach the FTO for the purpose of rectifying the deficiency. We find that this itself would substantiate that the subscriber is not representative or agent of the FTO. Further, we find no evidence to substantiate that the FTO has authorised its subscriber to be its representative. From the above, it is therefore evident that in the instant case, sub-section(2) of Section 13 is applicable and not sub-section (3)(b) of Section 13. Therefore, performance of services has no relevance in this case,” the Court observed.
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