Cable and Wireless Global India Private Limited v. Assistant Commissioner, CGST & Ors., Delhi High Court, W.P.(C) 14764/2022
Court: High Court of Delhi
Coram: Hon’ble Mr. Justice Yashwant Varma & Hon’ble Mr. Justice Ravinder Dudeja
Petition No.: W.P.(C) 14764/2022
Category of Dispute: Refund of unutilised Input Tax Credit – Export of Services
Relevant Provisions:
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Section 2(6), Section 2(15) of the IGST Act, 2017
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Section 2(71), Section 25(4) & (5) of the CGST Act, 2017
Date of Judgment: 26 September 2024
Facts
The petitioner, an Indian company having its registered office in Karnataka and branch offices in Delhi and Maharashtra, was engaged in providing Business Support Services to an overseas group entity, Vodafone Group Services Limited. The services were rendered by the Delhi branch office, invoices were raised from the Delhi GST registration, and the supply was admittedly treated as export of services. For FY 2019–20, the petitioner accumulated unutilised Input Tax Credit amounting to ₹47,33,053 and applied for refund thereof.
The refund application was rejected by the Order-in-Original dated 29 June 2021 and upheld in appeal on 7 June 2022 solely on the ground that the foreign remittances were received in the bank account of the Bangalore office and not directly in the bank account mapped to the Delhi registration
Questions / Issues for Consideration
Whether refund of unutilised ITC on export of services can be denied merely because consideration for such services was received in the bank account of another branch of the same legal entity, despite the services being rendered and invoiced from the registered exporting branch, having regard to Section 2(6)(iv) of the IGST Act and the concept of “distinct persons” under Section 25 of the CGST Act
Observations of the Court
The Court noted that the factum of export of services was never disputed by the department and that the sole objection pertained to the routing of foreign remittances. On a plain reading of Section 2(6)(iv) of the IGST Act, the Court held that the statute only requires receipt of payment by the “supplier of service” and does not mandate receipt in a particular bank account or branch. The emphasis is on receipt by the legal entity acting as supplier and not on the situs of the bank account
The Court further examined the definition of “location of the supplier of services” under Section 2(15) of the IGST Act and Section 2(71) of the CGST Act and held that the location is to be determined with reference to the registered place of business which actually supplied the service. The Delhi branch, being the establishment most directly concerned with the provision of services, was clearly the supplier. Receipt of consideration in the Bangalore bank account did not alter this statutory position
The reliance placed by the revenue on Section 25(4) and (5) of the CGST Act was held to be misconceived. The Court clarified that the concept of “distinct persons” is introduced for levy and collection of tax on inter-State and intra-State supplies and cannot be stretched to defeat substantive export benefits when the underlying supply conditions are admittedly fulfilled. The objection raised was characterised as overly technical and contrary to the scheme of GST law
Judgment / Verdict
The Delhi High Court allowed the writ petition, quashed the Order-in-Appeal dated 7 June 2022 and the underlying Order-in-Original dated 29 June 2021, and directed the respondents to process and grant the refund of unutilised ITC with due expedition. The Court conclusively held that receipt of export proceeds in the bank account of another branch of the same registered entity does not disentitle the exporter from refund when all conditions of export of services are otherwise satisfied
Summary of Cases Referred
| Case | Court | Issue | Verdict |
|---|---|---|---|
| Cable and Wireless Global India Pvt. Ltd. v. AC, CGST | Delhi High Court | ITC refund on export of services where payment received in different branch account | Refund allowed; bank account location held irrelevant if supplier and export conditions are satisfied |
Between Fine Lines – Practical Takeaway for Trade
This judgment decisively protects exporters of services operating through multiple GST registrations. Businesses frequently centralise foreign remittance receipts for treasury or operational convenience. The ruling clarifies that such commercial arrangements cannot be used to deny refund of unutilised ITC, provided the exporting branch is the actual supplier and export conditions under the IGST Act are fulfilled. It curtails hyper-technical objections by the department and reinforces substance over form in GST refund jurisprudence.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”