Delhi High Court in Vi’s Tax Refund Petition: Issue Notice to Ministry of Finance and Revenue Authorities

Delhi High Court in Vi’s Tax Refund Petition: Issue Notice to Ministry of Finance and Revenue Authorities

The Delhi High Court by its division bench comprising of Justices Vibhu Bakru and Amit Mahajan issued notice to the Ministry of Finance and others on Vodafone Idea's petition seeking refund of the integrated tax paid on international roaming and long-distance services provided to foreign telecom operators for their subscribers during their visit to India.

The Vodafone Idea's plea claimed that its telecom services, including International Inbound plea stated 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, were in the nature of export of services within the meaning of the Integrated Goods and Services Tax Act, (IGST) and such export is a zero-rated supply under the law.

Vodafone Idea while challenging the rejection of its refund claim for export of its services, contended that under Section 16(3) of the IGST, a registered person making zero rated supply is eligible to claim refund either by supply of goods under bond rated supply is eligible to claim refund either by supply of goods under bond or letter of undertaking without payment of Integrated Goods and Services Tax or by supply of goods with payment of the tax and claim refund of such tax paid.

Counsel appearing for Vodafone Idea Ltd. Vanita Bhargava clarified before the bench that Vodafone Idea had exported services on payment of integrated tax and claimed refund through various applications for four different time periods amounting to Rs 7.12 crore.

Per contra, the Assistant Commissioner and the Joint Commissioner of the Central Goods and Services Tax (CGST) body rejected Vodafone's application sought for refund of integrated tax by observing that the place of supply and consumption of services provided by it to the inbound roamers was India and, therefore, the same cannot be considered as export of services.

Aggrieved by the rejection orders, Vodafone Idea filed petition before the High Court.

According to Advocate Vanita Bhargava, 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 Indian Telecom operator argued that the joint commissioner office had referred 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.

The counsels appearing for the respondents accepted the notice and sought time to take instructions.

The bench proceeded to list the matter on 27th April, 2023.