A Division Bench comprising Justice Vibhu Bakru and Amit Mahajan issued the notice to the Finance ministry and the revenue authorities on Vodafone’s plea claiming that its telecom services, including International Inbound Roaming Services (IIR) and International Long Distance Services (ILD) provided to Foreign Telecom Operators (FTOs) subscribers during their visit to India, are in the nature of export of services within the meaning of the Integrated Goods & Services Tax Act, and such export is a zero-rated supply under the law.
Challenging the rejection of its refund claim for export of its services, Vodafone said that under Section 16 (3), a registered person making zero rated supply is eligible to claim refund either by supply of goods under bond or letter of undertaking without payment of Integrated Goods & Services Tax or by supply of goods with payment of the tax and claim refund of such tax paid.
Counsel Vinita Bhargava told the court that Vodafone exported services on payment of integrated tax and claimed refund through various applications for four different time periods totalling Rs 7.12 crore.
However, both the assistant commissioner and the joint Commissioner of the central goods and services tax body rejected Vodafone’s application for refund of integrated tax holding that the place of supply and consumption of services provided by it to the inbound roamers was in India and, therefore, the same cannot be considered as export of services. The rejection orders were challenged before the HC.
Bhargava said that the joint commissioner office has proceeded on the erroneous assumption that the individual subscribers of the foreign telecom operators are acting on its behalf and that the service cannot be rendered without the physical presence of the recipient or the person acting on his behalf.
The petition stated that Vodafone provided services “irrespective of the fact whether there is any subscriber of FTOs physically present in Delhi. In case the subscriber of FTOs is present in Delhi, then such subscriber is connected to the services already being provided by the Petitioner. Thus, the observation made by the Respondent (department) that the subscriber’s physical presence is necessary to provide service is totally erroneous. The telecom services can be provided or performed by the petitioner (Vodafone) regardless of whether the subscriber of such FTO is present in Delhi or not. Further, the subscriber is not privy to the contract entered between the petitioner and the FTO.The teleco said that the joint commissioner office relied upon a withdrawn 2007 circular for its observation on export of services. The recipient of supply of goods and services are the foreign telecom operators who are located outside India in accordance with central GST law, it said.
