The Bombay High Court while allowing the Input Tax Credit (ITC) held that the engineering, design services exported to foreign group/sister company qualifies as “Export Of Services”.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has observed that the references by Appellate Authority to the meaning of the term “agent” or “agency” in Blacks Law Dictionary, various judicial pronouncements, Bowstead on Agency, Halsbury’s Laws of England, in the impugned orders, are wholly misplaced and irrelevant. Appellate Authority is bound by the definition of the word “agent” under Section 2(5) of the CGST/MGST Act.
The bench stated that the Petitioner is eligible for refund of unutilized ITC on account of zero rated supplies in terms of Section 54 of the CGST Act and the same shall be granted to them along with statutory interest under Section 56 of the CGST Act. This exercise shall be done within a period of 4 weeks from the date of uploading of this order on the High Court website.
The Petitioner/assessee had filed two refund applications for the period July to September 2021 and October to December 2021 claiming refund of Rs.13,75,244 and Rs.25,88,634 respectively, of the unutilised ITC under Section 54(3) of Central Goods and Services Act, 2017/Maharashtra Goods and Services Tax Act, 2017 read with Rule 89 (4) of Central Goods and Services Rules, 2017/ Maharashtra Goods and Services Tax Rules, 2017 for making zero rated supplies, which came to be rejected by the Original Authority – State Tax officer and, upheld by the Appellate Authority on the ground that the recipients of the services located outside India are carrying on business through the “agency” in India i.e. the Petitioner and hence the Petitioner qualifies as “mere establishment of distinct person”.
Thus, the Petitioner did not provide zero rated supplies and consequently, not entitled to a refund of unutilized ITC under Section 54(3) of the CGST/MGST Act.
The Petitioner supplies engineering services for industrial and manufacturing projects, specialized office support services, management consulting and management services, maintenance and repair services etc., and also supplies goods to its customers. The said supplies are to Petitioner’s group companies/ related persons located outside India. The Petitioner does not supply either goods or services in the Domestic Tariff Area (DTA).
The Petitioner was earlier registered in the name of HMD Seal/ Less Pumps Industrial (India) Private Ltd. The name of the Petitioner was changed to Sundyne Pumps and Compressors India Private Ltd. with effect from 19.07.2023. The GST registration was appropriately amended.
The overseas entities [to which supplies were made] are independent body corporates/ legal undertakings incorporated under the laws of their respective jurisdictions. Since, the entire supplies of the Petitioner were to the recipient located outside India, the said supplies qualified as “Exports of Goods” and “Export of Services”, under Section 2(5) and 2(6) of the Integrated Goods and Services Tax Act, 2017, respectively, and they were zero-rated supplies in terms of Section 16 of the IGST Act. Therefore, the Petitioner was entitled to a refund of unutilised ITC in terms of Section 54(3) of the CGST/MGST Act read with Rule 89(4) of the CGST/MGST Rules.
The court held that the Petitioner is eligible for refund of unutilized ITC on account of zero rated supplies in terms of Section 54 of the CGST Act and the same shall be granted to them along with statutory interest under Section 56 of the CGST Act. This exercise shall be done within a period of 4 weeks from the date of uploading of this order on the High Court website.
Case Details
Case Title: Sundyne Pumps and Compressors India Pvt Ltd Versus The Union of India
Case No.: WRIT PETITION NO.15228 OF 2023
Date: 16th June, 2025
Counsel For Petitioner: Prakash Shah, Senior Advocate
Counsel For Respondent: S. D. Vyas, Addl. G.P.
Read More: Advisory to file pending returns before expiry of three years: GSTN
- Eicher Motors Receives Rs. 168.19 Crore GST Demand Notice - July 11, 2025
- Sameer Wankhede Bribery Probe –Bombay HC Frustrated At CBI’s Unending Procrastination And Repeated Adjournments – Extends Interim Protection In Plea To Quash FIR - July 11, 2025
- 13-Year Delay in Tax Appeal: ITAT Indore Accepts Commercial Pilot’s Plea, Orders Fresh Assessment - July 11, 2025
