Bombay HC Rules Design Services to Foreign Affiliates Qualify as Export, Allowing ITC Refund

• Assessee provided design and engineering services to foreign group companies and previously received ITC refunds without departmental appeals.
• Department rejected refund claims for July to December 2021, alleging the assessee acted as an agent, disqualifying the supply as export.
• Circular clarified that supplies to related parties qualify as export of services, countering the department’s argument.
• Definition of an agent requires a third party, but only two parties existed, so the assessee cannot be considered an agent.
• Assessee and foreign recipients are independent entities, services qualify as exports, and assessee is entitled to a refund of unutilized ITC.
• Bombay HC ruled in favor of the assessee in the case Sundyne Pumps and Compressors India P Ltd v Union of India.

Source: a2ztaxcorp.net

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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