Water India Pvt Ltd. Vs Union Of India

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

In W.P.No.10226/2022, petitioner seeks for the following reliefs:-

(A) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated 14.03.2022 bearing SCN No. 158/2021-22 and having Digital Identification  No. (‘DIN’) 202203DSS0000000CCEB, enclosed as Annexure A for the reasons stated in the grounds.

(B) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 8 of Integrated Goods and Services Tax Act, 2017, enclosed as Annexure B, as unconstitutional for the reasons stated in the grounds.

(C) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 13 (8) (b) of Integrated Goods and Services Tax Act, 2017, enclosed as Annexure C, as unconstitutional for the reasons stated in the grounds.

(D) Issue a writ of certiorari or any other writ or direction or order to quash Notification No. 14/2017-CT dated 01.07.2017, enclosed as Annexure D for the reasons stated in the grounds.

(E) Issue a writ of certiorari or any other writ or direction or order to quash Circular vide Circular No. No. 159/15/2021 dated 20.09.2021 to extent of Para 3,6 as unconstitutional, enclosed as Annexure E for the reasons stated in the grounds.

(F) Issue a writ of certiorari or any other writ or direction or order to quash Circular No. 3/3/2017-GST dated 05.07.2017 issued by the 2nd respondent, enclosed as Annexure F, for the reasons stated in the grounds.

(G) Grant such other consequential reliefs as this Honourable High Court may think fit including refund of amounts paid, if any and the cost of this writ petition.”

In W.P.No.3942/2021, petitioner seeks for the following reliefs:-

“ A) Issue a writ of certiorari or any other writ or direction or order to quash Impugned show cause notice dated 14.12.2020 bearing SCN No. 125/2020-21 and having Digital Identification No. (‘DIN’) 202012DSS00000777808, enclosed as Annexure A for the reasons stated in the grounds.

(B) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 174 of Central Goods and Services Tax Act, 2017, enclosed as Annexure B, as unconstitutional for the reasons stated in the grounds.

(C) Issue a writ of certiorari or any other writ or direction or order to quash Notification No. 14/2017-CT dated 01.07.2017, enclosed as Annexure C for the reasons stated in the grounds.

(D) Issue a writ of certiorari or any other writ or direction or order to quash Notification No. 22/2014-ST dated 16.09.2014, enclosed as Annexure D for the reasons stated in the grounds.

(E) Writ of declaration or any other appropriate writ or direction to declare that the provisions of Section 66C of the Finance Act, 1994, enclosed as Annexure E as unconstitutional for the reasons stated in the grounds.

(F) Writ of declaration or any other appropriate writ or direction or order to declare Rule 9(C) of the Place of Provision of Services Rules, 2012, enclosed as Annexure F as unconstitutional for the reasons stated in the grounds.

(G) Grant such other consequential reliefs as this Honourable High Court may think fit including refund of amounts paid, if any and the cost of this writ petition.”

5. The brief facts giving rise to the present petitions are as under:-

The petitioner in both the petitions i.e., M/s. Waters India Pvt. Ltd., was registered with the service tax / GST Department for providing various services such as marketing, promotion, warranty replacement services etc. The petitioner entered into Products and Technical Services Agreements dated 01.06.2015 and 01.06.2020 with M/s. Waters, Austria which is an overseas entity and recipient of the services supplied by the petitioner which amounts to export of services, on account of which, the petitioner was not liable to pay service tax / GST on the said supply of services.

2.1 The respondents issued the impugned show cause notices dated 14.12.2020 and 14.03.2022 respectively calling upon and demanding the petitioner to pay service tax / GST, aggrieved by which, the petitioner is before this Court by way of the present petition. Since the petitioner in both the petitions is M/s.Waters India Pvt. Ltd., and common questions of law and fact arise for consideration in both the petitions, which are in relation to the same subject matter, they are taken up together for consideration and disposed of by this common order.

3. Heard Sri. V. Raghuraman, learned Senior counsel along with Sri. C. R. Raghavendra and Sri. J. S. Bhanumurthy, learned counsel appearing for the petitioner and learned counsel appearing for the respondents and perused the material on record. They have not argued on the validity of the provisions or the circulars and therefore these matters will be left open for consideration in an appropriate case.

4. Before adverting to the rival contentions, it would be necessary to extract the aforesaid Agreements dated 01.06.2015 and 01.06.2020 entered into between the petitioner and M/s. Waters ,Austria, the overseas recipient of the services supplied by the petitioner as hereunder:-

AGREEMENT DATED 01.06.2015

“PRODUCT AND TECNHICAL SERVICES AGREEMENT

The agreement is made on this 1^st day of June 2015 between:

WATERS Ges.mb.H., an Austrian Limited Corporation having its Corporate office in Hietzinger Hauptstrasse, MS. A-1130 Vienna (herein under referred to as WATERS which term shall, unless repugnant to the subject or context, be deemed to include, the said Corporation, its successors & assigns) of the one part:

AND

WATERS (INDIA) PRIVATE LIMITED a company duly formed and registered in India, under the Indian Companies Act, 1956, having its principal place of business at # 36A, II Phase, Peenya Industrial Area, Bangalore-560 058. Karnataka., Republic of India, (hereinafter referred to as WIPL which terms shall, unless repugnant to the subject or context, to be deemed to include the said company, its successors, and permitted assigns) of the other part:

WHEREAS the parties to this agreement are desirous of entering into a new agreement in suppression of Product and Technical Service agreement dated 1^st June 2010 in view of the changing business opportunities.

WHEREAS WATERS is engaged in manufacture of specialized products and they are desirous of having a reliable organization to undertake complete support services which includes but is not limited to technical stance, market research as well as for the purpose of promotion of the products and product marketing culminating in obtaining orders and follow up for payment and the activities of installation, commissioning and servicing of their finished products in India.

AND WHEREAS WIPL has the technical expertise to carry out the said support services in India.

IN CONSIDERATION of their mutual promises and covenants herein set forth and of other good and valuable consideration the parties hereto agree as follows:

1. DEFINITIONS

A. “Product” means the products manufactured and/or marketed by Waters Corporation, USA and any of its subsidiaries.

B. “Support services” means assistance and support services provided by WIPL to Waters on principal to principal basis in setting up and managing the activities of product knowledge dissemination through exhibition, road shows, seminars, sponsorship of events, conducting market survey and other similar support activities culminating in reports to be sent from time to time by WIPL to Waters preferably through electronic means.

C. “Marketing and Technical Support Services” means the services of on behalf of Waters to position the required equipments according to the customer needs based on the inputs received from the customers as per the instructions of Waters and services of assistance to Waters in execution of such order which includes assistance in delivery of imported goods to the customer, installation of the goods and servicing of goods as per the instructions.

D. “Territory” means the territory of India.

It is mutually agreed that the above definitions may be varied.

2. TENURE

The agreement would be valid for a period of (5) Five years, unless otherwise agreed to mutually by both WATERS AND WIPL in writing.

3. DUTIES OF WIPL

Support services

WIPL shall assist and support on principal to principal basis on following activities:

– Product knowledge dissemination through exhibition, road shows, seminars;

– Conducting market survey and other similar support activities.

Such other services, mutually agreed in writing between the parties in connection with marketing of the products of Waters may also be undertaken.

B. Marketing and Technical Support Services

a. WIPL agrees to canvass and guide the customers to interact/place the orders with Waters for the sale of products manufactured and/or traded by WATERS. For this purpose, WIPL agrees not to promote the sale of products outside the territory. The essence of this part of the agreement is towards marketing and position the Waters products according to customer needs and all other related activities would be considered incidental thereof. All orders that are procured by WIPL, are subject to acceptance by WATERS at its sole discretion. Waters reserves the right to canvass its products directly.

b. WIPL agrees to provide such support services, as mutually agreed between the parties, for the purpose of delivery of the documents of title to goods, manual and other similar documents related to imported goods to the customer in India.

c. WIPL agrees to provide and maintain within the Territory an adequate installation and service capability for the products. WIPL shall use its best efforts to provide service to and to perform all necessary repairs on all products located in the Territory in a prompt and proper manner. If any repairs or replacement is required on any product that is still under the applicable WATERS warranty.

i) WATERS will directly undertake to replace the parts to customer concerned free of cost. In case the costs involved in clearing the consignment and delivery incurred / to be incurred by the customer in India is reimbursed / incurred by WIPL, WATERS will reimburse the said costs to WIPL on actual cost basis.

ii) In the exigency of WIPL replacing the product locally from its stock, WATERS would replace the parts free of cost to WIPL. In such cases the costs involved in clearing the consignment and taking delivery in India would be reimbursed by WATERS to WIPL on actual cost basis.

d. WIPL agrees to perform all such activities to make the products fit for beneficial use of customers with Modules, Accessories, PCB’s spare parts etc., received by customers directly from WATERS.

e. It is hereby mutually agreed that notwithstanding anything in this agreement, WATERS reserves the right to deal directly with any customer located within this Territory and to fulfill on its own account any order for products which it receives directly from any such customer. In the case of orders for delivery of products in the territory received directly from customers, WATERS will consider payment to WIPL of compensation in accordance with Section 4 depending upon WIPL’s contribution towards obtaining or supporting any such order.

f. WIPL agrees to maintain records of all orders for the products procured for WATERS and produce copies of all orders and any correspondences relating to such orders, if requested by WATERS.

g. WIPL agrees to render assistance in following up with Customer Outstanding to WATERS.

4. COMPENSATION

A. Support services

In consideration of the services rendered by WIPL as per Section 3(A), an amount as computed as 5% of value of sales made by Waters to customers in the territory. Value of sales for this purpose shall be net price charged to customer excluding the freight and insurance charges.

WIPL shall issue invoices on monthly basis for the support services provided, within 5 days from the end of each month based on the sales made for such month.

B. Marketing and Technical Support Services

For the services rendered by WIPL as per Section 3(B), service charges of 5% of the net prices (net price defined as price after discounts but exclusive insurance and freight charges) on the products actually imported by Customers would be payable.

The said payment would be due as soon as the Invoice is raised by WATERS on the Customers. WATERS shall intimate the concerned details on a monthly basis to WIPL, who in turn would intimate its confirmation to WATERS.

WIPL shall issue invoices on monthly basis for the Marketing and Technical Support Services provided, within 5 days from the end of the month in which the services are provided.

All payments under this agreement will be in US Dollars or in convertible foreign exchange only.

5. TRADE MARKS/PATENTS

The trade marks/patents of the products including future products shall remain the sole property of WATERS and its usage by WIPL shall be subject to authorization from WATERS. WIPL shall acquire no right whatsoever in the said trademarks/patents merely because of its use thereof. WIPL shall also notify WATERS of any infringement of trademarks/patents of which it becomes aware and assist WATERS in defending such infringement. The costs of such defence would be borne by WATERS.

6. TERMINATION

This agreement can be terminated at any time with 30 days notice in the following circumstances:

i. If either party fail to perform their obligations as per the terms of the agreement, the other party shall have the right to terminate the agreement.

ii. If either party becomes insolvent, or there is a change in the ownership or on the basis of circumstances beyond control of either of the concerned parties.

In all other cases, either party may terminate the agreement by giving 90 days notice in writing. This termination shall not prejudice any obligations that may have arisen under this agreement prior to such termination.

7. WIPL NOT LEGAL REPRESENTATIVE OF WATERS

This agreement does not constitute WIPL as the agent or legal representative of WATERS for any purpose whatsoever. WIPL is not granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of WATERS or to bind WATERS in any manner whatsoever.

8. SERVING OF COMMUNICATION

Any notice or other communication required or permitted to be made or given by either party hereto pursuant to this Agreement shall be sufficiently made or given on the date of receipt if sent to such party by fax, courier, telex or telegraph or by registered or certified air mail postage prepaid, addressed in the case of WATERS Hietzinger Hauptstrasse, 145, A-1130 Vienna, and in the case of the WIPL to # 36A, II Phase, Peenya Industrial Area, Bangalore – 560 058 or to such other address as shall be designated by written notice given to the other party in accordance with the provisions of this section.

9. ASSIGNMENT

Neither this document nor any of the rights hereunder may be assigned, transferred or otherwise disposed off by either party without the prior written consent of the other party, and any assignment, transfer or other disposition without such consent shall be null and void.

10. SEVERABILITY

If any individual provision or portion of any provision included in this document shall be declared invalid or illegal or unenforceable by any court of competent jurisdiction, then such invalid, illegal or unenforceable provision shall be deemed to be eliminated here from and the remaining provisions shall be enforced in such proceedings. It is the express intention of the parties, however, that in case a provision or portion thereof is declared invalid, illegal, or unenforceable in any respect not material, the parties shall continue their joint enterprise with such adjustments in their arrangements, if any, as are reasonably required and may be mutually fair in light of their original intent as reflected in this document.

11. ARBITRATION

WIPL and WATERS will attempt to settle all disputes that may arise from the Terms of this Contract. One or more arbitrators appointed in accordance with the Rules shall finally settle unresolved disputes in connection with the present contract under the Rules of Arbitration and Conciliation of the International Chamber of Commerce (ICC) in Paris. The decision of this arbitration will be final and binding on both WIPL and WATERS.”

AGREEMENT DATED 01.06.2020

“PRODUCT AND TECHNICAL SERVICES AGREEMENT

This agreement is made on this 1^st day of June 2020 between:

WATERS Ges.m.b.H., an Austrian Limited Corporation having its Corporate Office in Hietzinger Hauptstrasse, 145. A-1130 Vienna (herein under referred to as WATERS which term shall, unless repugnant to the subject or context, be deemed to include, the said Corporation, its successors & assigns) of one part:

AND

WATERS (INDIA) PRIVATE LIMITED a Company duly formed and Reregistered in India, under the Indian Companies Act, 1956, having its principal place of business at # 36A, II Phase, Peenya Industrial Ares, Bangalore 560058. Karnataka, Republic of India, (hereinafter referred to as WIPL, which terms shall, unless repugnant to the subject of context, to be deemed to include the said company, its successors, and permitted assigns) of the other part:

WHEREAS the parties had entered into a Product and Technical Service agreement dated 15 June 2015 valid for a period of five (5) Le until 31 May 2020.

AND WHEREAS the parties are now desirous of renewing the Agreement for the further period of five (5) effective from 1 June 2020.

AND WHEREAS WATERS is engaged in manufacture of specialized products and they are desirous of having a reliable organization to undertake complete support services which includes bur is not limited to technical assistance, market research as well as for the purpose of promotion of the products and product marketing culminating in obtaining orders and follow up for payment and the activities of installation, commissioning and servicing of their finished products in India.

AND WHEREAS WIPL. has the technical expertise to carry out the said support services in India

IN CONSIDERATION of their mutual promises and covenants herein set forth and of other good and valuable consideration the parties hereto agree as follows:

1. DEFINITIONS

A. “Product” means the products manufactured and/or marketed by Waters Corporation, USA and any of its subsidiaries.

B. “Support Services” means assistance and support services provided by WIPL to Waters on principal to principal basis in setting up and managing the activities of product knowledge dissemination through exhibition, road shows, seminars, sponsorship of events, conducting market survey and other similar support activities culminating in reports to be sent from time to time by WIPL to Waters preferably through electronic means.

C. “Marketing and Technical Support Services” means the services of on behalf of Waters to position the required equipments according to the customer needs based on the inputs received from the customers as per the instructions of Waters and services of assistance to Waters in execution of such order which includes assistance in delivery of imported goods to the customer installation of the goods and servicing of goods as per the instructions,

D. “Territory” means the territory of India.

It is mutually agreed that the above definitions may be varied

2. TENURE

The Agreement shall be valid for a period of (5) Five years, with effect from 1 June 2020 and valid und 31-the parties providing 30 days’ notice in writing renewed for further terms unless otherwise terminated by the parties providing 30 days ’ notice in writing.

3. DUTIES OF WIPL

4. Support services

WIPL shall assist and support on principal to principal basis on following activities:

– Product knowledge dissemination through exhibition, road shows, seminars,

– Conducting market survey and other similar support activities.

Such other services, mutually agreed in writing berween the parties in connection with marketing of the products of Waters may also be undertaken.

B. Marketing and Technical Support Services

a. WIPL, agrees to canvass and guide the customers to interact/place the orders with Waters for the sale of products manufactured and/or traded by WATERS. For this purpose, WIPL, agrees not to promote the sale of products outside the territory. The essence of this part of the agreement is towards marketing and position the Waters products according to customer needs and all other related activities would be considered incidental thereof.

All orders that are procured by WIPL are subject to acceptance by WATERS at its sole discretion. Waters reserves the right to canvass its products directly.

b. WIPL agrees to provide such support services, as mutually agreed between the parties, for the purpose of delivery of the documents of title to goods, manual and other similar documents related to imported goods to the customer in India.

c. WIPL agrees to provide and maintain within the Territory an adequate installation and service capability for the products. WIPL shall use its best efforts to provide service to and to perform all necessary repairs on all products located in the Territory in a prompt and proper manner. If any repairs or replacement is required on any product that is still under the applicable WATERS warranty.

i) WATERS will directly undertake to replace the parts to customer conceded free of cost. In case the costs involved in clearing the consignment and delivery incurred / to be incurred by the customer in India is reimbursed/incurred by WIPI, WATERS will reimburse the mid costs to WIPL on actual cost basis.

ii) In the exigency of WIPL replacing the product locally from its stock, WATERS would replace the parts free of cost to WIPL. In such cases the costs involved in clearing the consignment and taking delivery in India would be reimbursed by WATERS to WIPL, on actual cost basis.

d. WIPL agrees to perform all such activities to make the products fit for beneficial use of customers with Modules, Accessories, PCB’s spare parts etc, received by customers directly from WATERS.

e. It is hereby mutually agreed that notwithstanding anything in this agreement, WATERS reserves the right to deal directly with any customer located within this Territory and to fulfill on its own account any order for products which it receives directly from any such customer. In the case of orders for delivery of products in the territory received directly from customers, WATERS will consider payment to WIPL. of compensation in accordance with Section 4 depending upon. WIPL’s contribution towards obtaining or supporting any such order.

f. WIPL agrees to maintain records of all orders for the products procured for WATERS and produce copies of all orders and any correspondences relating to such orders, if requested by WATERS

g. WIPL agrees to render assistance in following up with Customer Outstanding to WATERS

4. COMPENSATION

A. Support services

In consideration of the services rendered by WIPL as per Section 3(A), an amount as computed as 5% of value of sales made by Waters to customers in the territory. Value of sales for this purpose shall be net price charged to customer excluding the freight and insurance charges.

WIPL shall issue invoices on monthly basis for the support services provided, within 5 days from the end of each month based on the sales made for such month.

B. Marketing and Technical Support Services

For the services rendered by WIPL as per Section 3(B), service charges of 55% of the net prices (net price defined as price after discounts bur exclusive insurance and freight charges) on the products actually imported by Customers would be payable.

The said payment would be due as soon as the Invoice is raised by WATERS on the Customers. WATERS shall intimate the concerned details on a monthly basis to WIPL, who in turn would intimate ins confirmation to WATERS.

WIPL. shall issue invoices on monthly basis for the Marketing and Technical Support Services provided, within 5 days from the end of the month in which the services are provided.

All payments under this agreement will be in US Dollars or in convertible foreign exchange only.

5. TRADE MARKS/PATENTS

The trade marks/patents of the products including future products shall remain the sole property of WATERS and its usage by WIPL shall be subject to authorization from WATERS WIPI shall acquire no right whatsoever in the said trademarks/patents merely because of its use thereof WIPL shall also notify WATERS of any infringement of trademarks/patents of which it becomes aware and assist WATERS in defending such infringement. The costs of such defence would be borne by WATERS.

6. TERMINATION

This agreement can be terminated at any time with 30 days notice in the following circumstances:

i. If either party fail to perform their obligations as per the terms of the agreement, the other party shall have the right to terminate the agreement.

ii. If either party becomes insolvent, or there is a change in the ownership or on the basis of circumstances beyond control of either of the concerned parties.

In all other cases, either party may terminate the agreement by giving 90 days notice in writing. This termination shall not prejudice any obligations that may have arisen under this agreement prior to such termination

7. WIPL NOT LEGAL REPRESENTATIVE OF WATERS

This agreement does not constitute WIPI, as the agent or legal representative of WATERS for any purpose whatsoever. WIPL is not granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of WATERS or to bind WATERS in any manner whatsoever.

8. SERVING OF COMMUNICATION

Any notice or other communication required or permitted to be made or given by either party hereto pursuant to this Agreement shall be sufficiently made or given on the date of receipt if sent to such party by fax, courier, telex or telegraph or by registered or certified air mail postage prepaid, addressed in the case of WATERS Hietzinger Hauptstrasse, 145, A-1130 Vienna, and in the case of the WIPL to # 36A, II Phase, Peenya Industrial Area, Bangalore-560 058 or to such other address as shall be designated by written notice given to the other party in accordance with the provisions of this section.

9. ASSIGNMENT

Neither this document nor any of the rights hereunder may be assigned, transferred or otherwise disposed off by either party without the prior written consent of the other party, and any assignment, transfer or other disposition without such consent shall be null and void

10. SEVERABILITY

If say individual provision or portion of any provision included in this document shall be declared invalid or illegal or unenforceable by any court of competent jurisdiction, then such invalid, illegal or unenforceable provision shall be deemed to be eliminated here from and the remaining provisions shall be enforced in such proceedings. It is the express intention of the parties, however, that in case a provision of portion thereof is declared invalid, illegal, or unenforceable in any respect not material, the parties shall continue their joint enterprise with such adjustments in their arrangements, if any, as are reasonably required and may be mutually fair in light of their original intent as reflected in this document

11. ARBITRATION

WIPL and WATERS will attempt to settle all disputes that may arise from the Terms of this Contract. One or more arbitrators appointed in accordance with the Rules shall finally settle unresolved disputes in connection with the present contract under the Rules of Arbitration and Conciliation of the Imitational Chamber of Commerce (ICC) in Paris. The decision of this arbitration will be final and binding on both WIPL and WATERS.”

5. A perusal of the material on record will indicate that under identical circumstances in the case of M/s. Columbia Sportswear India Sourcing Pvt. Ltd., vs. Union of India & others – W.P.no.12116/2024 & connected matters Dated 26.04.2025, this Court came to the conclusion that the petitioner was not an ‘intermediary’ under Section 2(13) of the IGST Act and provisions of the Finance Act, 1994 and the services provided by the petitioner to its overseas service recipients / entities are that of an independent service provider which qualify as export of services under the service tax provisions and Section 2(6) of the IGST Act and allowed and disposed of the petitions as hereunder:-

11. A conspectus of the above discussion would indicate that the legal position regarding what would constitute intermediary services vis-a-vis a principal to principal relationship can be summarised as under:

• In terms of Section 2(13) of the IGST Act, 2017, the definition of what is an intermediary would show that it would mean a broker or agent or any other person and the name by what he is called is not important or relevant; what is important/relevant is the function he provides and that would be arranging or facilitating the supply of goods or services or both or of securities; such facilitation or arrangement should be between two or more persons; further, he should not make this supply on his own account;
• In terms of the above, it is clear that if a person acts as an intermediary, apart from him, at least two persons should be involved and the intermediary would facilitate supply between two or more of them. Therefore, there should be (i) a minimum of three parties (ii) two distinct supplies, where principal will supply the goods or services to a third party as one supply and such a transaction should be facilitated or arranged by one party who is then called an intermediary rendering the second supply to the principal (iii) such a transaction would therefore, mean that one person actually represents the principal as an agent and therefore (iv) does not do his service on his own account.
• The agreement, therefore, should clearly indicate that he is acting as such facilitator between two or more persons and therefore, at least three parties would then be involved as pointed out by the Apex Court in Bharati Cellular’s case supra stating that it should be a triangular relationship, though the third party need not be identified in the agreement itself but it would be apparent from the agreement that there is a triangular relationship being established in such agreement.
• Four essential features stand out in an agency relationship which are set out by the Apex Court as under :

a) The essential characteristic of an agent is the legal power vested with the agent to alter his principal’s legal relationship with a third party and the principal’s co-relative liability to have his relations altered;

b) As the agent acts on behalf of the principal, one of the prime elements of the relationship is the exercise of a degree of control by the principal over the conduct of the activities of the agent. This degree of control is less than the control exercised by the master on the servant, and is different from the rights and obligations in case of principal to principal and independent contractor relationship;

c) The task entrusted by the principal to the agent should result in a fiduciary relationship. The fiduciary relationship is the manifestation of consent by one person to another to act on his or her behalf and subject to his or her control, and the reciprocal consent by the other to do so;

d) As the business done by the agent is on the principal’s account, the agent is liable to render accounts thereof to the principal. An agent is entitled to remuneration from the principal for the work he performs for the principal.

• Absence of these ingredients would show that the relationship was not really one of agency but of an independent service provider. This is clear from the circular set out for data hosting services where it is clear that when a person does data hosting services for a foreign company and the foreign company uses this to store third party data, the person providing such services is doing it without any contact with the third party and therefore, cannot be called an intermediary as he does not facilitate or arrange. He is only doing the said services on his own account to the foreign company who could store any data on that platform.
• Therefore, even if there are three parties, one should clearly see whether the agreement casts an obligation on the service provider to act on someone else’s behalf in respect of such supply and only then it would be an intermediary services. For example, where one party to a contract with another party, sub contracts a portion of his work to a third party, it does not mean that an intermediary relationship is established. Sub contractors would very well be doing the said work on their own account as is often the case with software development or research work carried out in India on contract basis.
• It is also axiomatic that absence of three persons would straightaway rule out the agreement from the scope of intermediary services as the agreement would then be a service provider-service receiver relationship without the service provider doing any facilitating or arranging. Therefore, in a given agreement, if there is no scope for the service provider to act on behalf of the service receiver, then the agreement is one on principal to principal basis where services are provided on own account.
• It would be necessary to consider that the definition of “intermediary” is far more restricted than that of an “agent”. The term “agent” is not defined in the IGST Act, 2017 but it is defined in the CGST Act, 2017 under Section 2(5) to mean, a person who carries on the business of supply or receipt of goods or services or both on behalf of another person and he could be a factor, broker, commission agent, arhatia, del credere agent, auctioneer or any other mercantile agent by whatever name called. Therefore, the fine distinction that is there between these two is that while the agent supplies or receives goods or services on behalf of another person, the intermediary only arranges or facilitates supply on behalf of another person without himself supplying the same. This distinction also has to be kept in mind as the definition of intermediary calls him an agent who only does facilitation or arrangement and therefore, while he is an agent and acts for another, his job is to only facilitate or arrange supplies between his principal and a third party.
• The position in service tax remains identical as set out in the decisions extracted in Amazon’s case supra.

12. In the light of the principles that emerge from the aforesaid Judgments, Circulars, Notifications etc., in the facts and circumstances obtaining in the instant cases as set out supra analyzing the said agreements, I am of the considered opinion that the petitioner is not an ‘intermediary’ under Section 2(13) of the IGST Act and provisions of the Finance Act, 1994 and the services provided by the petitioner to its service recipients are that of an independent service provider which qualify as export of services under the service tax provisions and 2(6) of the IGST Act and consequently, the impugned orders and demand of the respondents deserve to be quashed by issuing further directions in this regard for the following reasons:

(i) There are only two persons in the subject agreements;

(ii) The petitioner renders services on its own account to the service receiver located outside India and it does not enable supply between the foreign recipient and the third parties;

(iii) The acts of the petitioner are that of an independent contractor and it does not represent or bind the foreign client in the course of executing its services.

(iv) The foreign recipient, therefore, remunerates the petitioner by way of a service fee for the services rendered which is on a cost plus mark up basis and not based on percentage of success, etc. which is common in agency agreements.

(v) The foreign recipient is free to chose from whom he would procure and the petitioner’s recommendations are not final and binding on it and the petitioner cannot also represent that it is doing something on behalf of the foreign recipient.

(vi) The host of services rendered by the petitioner is more akin to business support services to enable efficient procurement of garments and a continuing business relationship rather than enabling procurement of orders on a commission basis.

13. In view of the aforesaid facts and circumstances, I am of the view that the impugned orders and demands made by the respondents deserve to be quashed.

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17. In the result, I pass the following:-

ORDER IN W.P.No.12116/2024

(i) W. P.No.12116/2024 is hereby partly allowed.

(ii) The impugned Order-in-Original No.34/2022-23 dated 01.07.2022 vide Annexure-A and impugned Order-in-Original No.104/2022-23 dated 28.03.2023 vide Annexure-B passed by the 3^rd respondent insofar as they relate to rejection of the refund claim of the petitioner pertaining to the issue of ‘intermediary / intermediary services’ are hereby quashed by holding that the services provided by the petitioner do not fall under the definition of ‘intermediary services’ and that the same is considered as export of services.

(iii) The impugned orders insofar as they relate to rejection of the refund claim of the petitioner on the ground that they are barred by limitation under Section 54 of the CGST Act are hereby set aside by holding that the refund claims of the petitioner are not barred by limitation in the light of the CBIC Notification bearing No.13/2022-Central Tax dated 05.07.2022 which is applicable to the refund claim of the petitioner;

(iv) The respondents are directed to grant/pay refund in favour of the petitioner together with interest under Section 56 of the CGST Act, 2017 as expeditiously as possible and at any rate within a period of three months from the date of receipt of a copy of this order.

(v) All other contentions and issues including rejection of all other refund claims of the petitioner are kept open to be adjudicated by the appropriate authorities bearing in mind the Circular No.183/15/2022-GST dated 27.12.2022 and Circular No.193/05/2023-GST dated 17.07.2023 and in accordance with law.

ORDER IN W.P.No.3420/2023

(i) P.No.3420/2024 is hereby partly allowed.

(ii) The impugned Order-in-Appeal dated 12.08.2022 vide Annexure-A passed by the respondents insofar as they relate to rejection of the refund claim of the petitioner pertaining to the issue of ‘intermediary / intermediary services’ are hereby quashed by holding that the services provided by the petitioner do not fall under the definition of ‘intermediary services’ and that the same is considered as export of services.

(iii) The impugned orders insofar as they relate to rejection of the refund claim of the petitioner on the ground that they are barred by limitation under Section 54 of the CGST Act are hereby set aside by holding that the refund claims of the petitioner are not barred by limitation in the light of the CBIC Notification bearing No.13/2022-Central Tax dated 05.07.2022 which is applicable to the refund claim of the petitioner;

(iv) The respondents are directed to grant/pay refund in favour of the petitioner together with interest under Section 56 of the CGST Act, 2017 as expeditiously as possible and at any rate within a period of three months from the date of receipt of a copy of this order.

(v) All other contentions and issues including rejection of all other refund claims of the petitioner are kept open to be adjudicated by the appropriate authorities bearing in mind the Circular No.183/15/2022-GST dated 27.12.2022 and Circular No.193/05/2023-GST dated 17.07.2023 and in accordance with law.

ORDER IN W.P.No.3376/2023

(i) W. P.No.3376/2024 is hereby partly allowed.

(ii) The impugned Order-in-Appeal dated 04.11.2022 vide Annexure-A passed by the respondents insofar as they relate to rejection of the refund claim of the petitioner pertaining to the issue of ‘intermediary / intermediary services’ are hereby quashed by holding that the services provided by the petitioner do not fall under the definition of ‘intermediary services’ and that the same is considered as export of services.

(iii) The impugned orders insofar as they relate to rejection of the refund claim of the petitioner on the ground that they are barred by limitation under Section 54 of the CGST Act are hereby set aside by holding that the refund claims of the petitioner are not barred by limitation in the light of the CBIC Notification bearing No.13/2022-Central Tax dated 05.07.2022 which is applicable to the refund claim of the petitioner;

(iv) The respondents are directed to grant/pay refund in favour of the petitioner together with interest under Section 56 of the CGST Act, 2017 as expeditiously as possible and at any rate within a period of three months from the date of receipt of a copy of this order.

(v) All other contentions and issues including rejection of all other refund claims of the petitioner are kept open to be adjudicated by the appropriate authorities bearing in mind the Circular No.183/15/2022-GST dated 27.12.2022 and Circular No.193/05/2023-GST dated 17.07.2023 and in accordance with law.

ORDER IN W.P.No.3486/2020

(i) W.P.No.3486/2020 is hereby partly allowed.

(ii) The impugned Order-in-Original dated 25.11.2019 vide Annexure-B passed by the respondents and all further demands, notices, orders, proceedings etc., pursuant thereto are hereby quashed.

6. In the instant case, a perusal of the subject agreements and the material on record would clearly indicate that the petitioners are discharging service tax / GST on the marketing and technical support services on which there is no dispute and the issue relates to support services which includes dissemination of product knowledge, conducting market surveys in India and reporting to the foreign company on the surveys done in India, which would culminate in the reports being sent to the foreign company wherein the services are being rendered on a principal to principal basis. It is also evident from the Agreements that the petitioner is not an agent or representative of the foreign company nor can be bind him as is set out in express terms in the agreements itself.

7. Under these circumstances, it is clear that the aforesaid judgment of this Court in Amazon’s case supra and the principles laid down therein are directly and squarely applicable to the subject Agreements in the present petitions, which accordingly deserve to be allowed by quashing the impugned show cause notices issued by the respondents.

8. In the result, I pass the following:-

ORDER  

(i) Both W.P.No.10226/2022 and W.P.No.3942/2021 are hereby partly allowed.

(ii) The impugned show cause notices at Annexure-A dated 14.03.2022 in W.P.No.10226/2022 and Annexure-A dated 14.12.2020 in W.P.No.3942/2021 and all further proceedings pursuant thereto are hereby quashed.