High Court: IT Services to Foreign Parent Are ‘Export of Services,’ Not Intermediary

Infodesk India Pvt. Ltd., a wholly owned Indian subsidiary of InfoDesk Inc., USA, approached the High Court after its GST refund claims were rejected by the adjudicating authority and later upheld by the appellate authority. The company provides software consultancy, IT infrastructure support, and editorial and content services exclusively to its US parent under a detailed services agreement.  Claiming that the transactions constituted “export of services” under Section 2(6) of the IGST Act, the petitioner applied for a refund of unutilized ITC.

However, the refund was denied. With no functional Appellate Tribunal available under Section 110 of the CGST Act, the petitioner invoked writ jurisdiction to challenge the findings.

Issue Before HC: Whether the Indian subsidiary’s software consultancy and support services rendered exclusively to its foreign parent qualify as “export of services” or whether they constitute “intermediary services” under the IGST Act, thereby impacting refund eligibility.

HC’s Order: The Hon’ble HC held that the petitioner was providing services on its own and not arranging or facilitating services between two different parties. The Court noted that the Indian subsidiary earned cost plus an 8% markup and bore all operational expenses independently. Thus, the Court decided that the activities satisfied all conditions under Section 2(6) of the IGST Act for export of services and did not fall within the statutory definition of intermediary services under Section 2(13).

The Court, while relying on Charomotolab and Biotech Solutions, clarified that the relevant date for limitation is the date on which the refund application is filed on the GST portal and acknowledged with an ARN, not the later physical submission of documents. Therefore, the Court quashed the Orders-in-Original and Orders-in-Appeal, directing the department to process the refund afresh.

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