Subsidiary’s Services to US Parent Are Zero-Rated Exports – ITC Refund Allowed

Case Details: Infodesk India (P.) Ltd. vs. Union of India - [2025] 181 taxmann.com 395 (Gujarat)

Judiciary and Counsel Details

A.S. Supehia & Pranav Trivedi, JJ.
Anand Nainawati for the Petitioner.
Deepak N Khanchandani & Param V Shah for the Respondent.

Facts of the Case

The petitioner was a wholly owned Indian subsidiary of a US company established exclusively to provide services fulfilling the parent company’s technical requirements by assisting it in carrying on the business of software development and related consultancy. It managed IT infrastructure, editorial and content creation activities, customer support, and raised tax invoices for providing software consultancy services directly to the parent company. It was submitted that the services were provided in an independent capacity and not as an agent or intermediary. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the petitioner was required to assist the parent company in carrying on its software consultancy business. The Court observed that the petitioner was to perform the services on its own account with payment based on actual costs plus an 8 per cent markup, thereby earning a profit. It found that the petitioner could not be regarded as an intermediary or agent and that the services were zero-rated exports. The Court directed the jurisdictional officer under GST to process the refund claim for unutilised input tax credit in accordance with Section 16 of the IGST Act and Section 54 of the CGST Act.