Case tittle | Material Recycling Association of India VS Union of India |
Court | Gujarat High Court |
Honourable Judge | Justice J.B.Pardiwala Justice Bhargav D. Karia |
Citation | 2020 (07) GSTPanacea 136 HC Gujarat R/Special Civil Application Nos. 13238 & 13243 Of 2018 |
Judgment Date | 24-July-2020 |
1. The matter is brought before the court with Mr. Viral K. Shah and Mr. P. Y. Divyeshwar, advocates representing respondents 1-3 respectively, who waive the service of notice of the rule.
2. The petitioner has filed a petition under Article 226 of the Constitution of India challenging the constitutional validity of Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 (IGST Act, 2017). The petition seeks to declare this section ultra vires under Articles 14 (Right to Equality), 19 (Right to Freedom), 265 (Taxation not without authority of law), and 286 (Restrictions as to imposition of tax on the sale or purchase of goods) of the Constitution of India. Additionally, the petitioner requests a direction to the respondent for the refund of IGST paid on services provided by the petitioner association’s members and their clients located outside India.
3. The petitioner is an association representing the recycling industry involved in the manufacture of metals and casting for various upstream industries in India. Its members also serve as agents for scrap and recycling companies based outside India, engaged in business promotion and marketing services for principals located abroad.
This case involves a petition under Article 226 of the Constitution of India challenging the constitutional validity of Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 (IGST Act, 2017). The petitioner, an association representing the recycling industry, argues that this provision is ultra vires under Articles 14, 19, 265, and 286 of the Constitution. They seek a directive for the refund of IGST paid on services provided by their members to clients located outside India.
The petitioner’s association comprises companies engaged in metal recycling and casting for various industries in India. They also act as agents for international recycling companies, providing business promotion and marketing services outside India. Additionally, they facilitate the sale of recycled scrap goods globally, including in non-taxable territories. Despite being registered as taxable persons under the Central Goods and Services Tax Act, 2017 (CGST Act), the petitioners claim they do not participate in the actual sale and purchase of scrap goods. Instead, foreign clients directly ship goods to purchasers in India or overseas, with transactions cleared by the purchasers themselves from customs. The foreign clients invoice the purchasers directly, who then remit payment directly to the foreign clients.
The petitioner contends that they receive compensation solely for facilitation services and should not be subject to IGST under Section 13(8)(b) of the IGST Act, 2017, arguing that this provision unfairly burdens them with taxation on transactions that occur wholly outside taxable territories.
The passage you provided appears to be a legal summary or an excerpt discussing certain provisions under the IGST Act, 2017, particularly focusing on the definition of an “intermediary” as per Section 2(13) and related conditions for the supply of services. Here’s a summarized breakdown:
Section 2(13) of the IGST Act defines an “intermediary” as a broker, agent, or any other person who facilitates the supply of goods, services, or securities between two or more parties. Importantly, an intermediary does not include a person who supplies such goods or services on their own account.
Regarding the supply of services under the IGST Act:
- Payment for services must be received by the supplier in convertible foreign exchange.
- The supplier and recipient of services must not be mere establishments of the same person, as per Explanation 1 in Section 8 of the Act.
The petitioner’s case presumably revolves around Section 13 of the IGST Act, which deals with scenarios where either the supplier’s or the recipient’s location is outside India.
This summary captures the essence of the legal provisions you mentioned, focusing on the definition of an intermediary and the conditions for the supply of services under the IGST Act, 2017.
Section 13 of the Integrated Goods and Services Tax (IGST) Act, 2017, outlines provisions related to determining the place of supply of services when either the supplier or recipient is located outside India. Here’s a summary of the relevant extract:
Section 13(1): This section applies to determine the place of supply of services when either the supplier or the recipient of services is located outside India.
Section 13(2): Generally, the place of supply of services (except those specified in subsections (3) to (13)) shall be the location of the recipient of services.
Section 13(8): However, for certain specified services, the place of supply shall be the location of the supplier of services. These services include:
(a) Services supplied by a banking company, financial institution, or non-banking financial company to account holders.
(b) Intermediary services.
(c) Services consisting of hiring means of transport, including yachts, but excluding certain specific cases.
This section essentially determines where GST (Goods and Services Tax) should be levied on services provided in cross-border transactions involving parties outside India, focusing on whether the service provider or recipient is located internationally.
service is rendered shall be construed accordingly.
The petitioner argues that Section 2(93) of the CGST Act defines the term “recipient” concerning the supply of goods or services. It delineates three scenarios:
1. Where consideration is payable, the recipient is the person liable to pay that consideration.
2. Where no consideration is payable for the supply of goods, the recipient is the person to whom the goods are delivered, made available, or to whom possession or use of the goods is given.
3. Where no consideration is payable for the supply of a service, the recipient is the person to whom the service is rendered.
The term “person to whom a service is rendered” includes any such recipient in the context of service provision.
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