Customer Support Services to Foreign Affiliates Not Intermediary: Refund Allowed

High Court of Karnataka | WP No. 13007 of 2024 (T-RES) | Judgment dated: 17.09.2024
Category: Refund of ITC – Intermediary Services Dispute
Relevant Sections: Section 2(6), Section 2(13), Section 13(8), Section 16 IGST Act, 2017; Section 54 CGST Act, 2017; Rule 89(4) CGST Rules, 2017

Facts of the Case (Paras 2–6):

1. The Petitioner, Amazon Development Centre India Pvt. Ltd., provided IT/ITES including customer support services to Amazon foreign affiliates under independent service agreements (Para 2.1–2.3).

2. Petitioner filed refund claim of unutilised ITC of ₹30.83 crore for Oct 2019 – Mar 2020 under Section 54 CGST Act. The adjudicating authority sanctioned ₹28.30 crore and rejected ₹2.52 crore (Para 2.2).

3. Both sides appealed: petitioner against rejection, and Revenue against part-allowance of ₹1.09 crore. Simultaneously, SCN was issued to recover alleged erroneous refund (Para 2.3–2.4).

4. Appellate Authority rejected petitioner’s appeal and allowed Revenue’s, resulting in total rejection of ₹3.61 crore refund (Para 2.4).

Question in Consideration (Paras 7–8):

• Whether customer support services rendered by Amazon India to its foreign affiliates qualify as “intermediary services” under Section 2(13) IGST Act, thereby disqualifying them as exports under Section 2(6) IGST Act and denying refund of ITC?

Observations of the Court (Paras 9–24):

1. CBIC Circular 159/15/2021-GST clarifies intermediary scope – requires three parties, two distinct supplies, and role of agent/broker; excludes sub-contracting and services on own account (Paras 9–11).

2. Agreements between petitioner and affiliates show no agency relationship; petitioner is expressly barred from entering/negotiating sales contracts (Para 13).

3. Petitioner provides services on principal-to-principal basis, performing the main supply, not arranging another supply (Para 12–13).

4. Reliance placed on Genpact India (P&H HC), Blackberry India (Delhi HC), Singtel Global (Delhi HC), Ernst & Young Ltd. (Delhi HC), Xilinx India (Delhi HC), Cube Highways (Delhi HC) – all holding that BPO/ITES exports are not intermediary services (Paras 14–27).

5. Illustration 4 of CBIC Circular itself clarifies that outsourced customer support services are not intermediary (Para 23).

Judgment of the Court (Paras 28–29):

• The Court held that:

  • Petitioner is not an intermediary under Section 2(13) IGST Act.

  • Customer support services rendered to foreign affiliates qualify as export of services under Section 2(6) IGST Act.

  • Rejection of refund of ₹3.61 crore and SCN were quashed as arbitrary and contrary to law.

Between Fine Lines (Simplified Outcome):

1. Amazon India provided services to its affiliates abroad, not to end customers.

2. No agency or brokerage role was established – services were on own account.

3. Subcontracting customer support is not intermediary service.

4. Court followed consistent precedents (Genpact, Blackberry, Singtel, EY).

5. Refund of ITC on exports was allowed; SCN was quashed.

Summary of Referred Cases

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