The Principal Bench of the GST Appellate Tribunal (GSTAT) has upheld the rejection of a GST refund claim amounting to ₹13.41 crore, ruling that procurement support services received from a foreign group entity constitute an import of services and are therefore taxable under GST.
The Tribunal further held that such services do not fall within the scope of intermediary services as defined under the Integrated Goods and Services Tax (IGST) Act, making the refund claim ineligible.
The dispute is concerned with the fact that an Indian company claimed procurement services from its Switzerland-based group entity, which acted as a centralised procurement hub for the multinational group.
The overseas entity provides services such as supplier identification, vendor evaluation, procurement strategy, contract negotiation, sourcing support, and supply chain management.
Under the Reverse Charge Mechanism (RCM), the Indian company filed IGST, treating the transactions as imports of services.
Thereafter, it requested a refund, claiming that the foreign entity only streamlined transactions between the suppliers and the Indian company, thereby making the services intermediary services with the place of supply outside India.
However, GSTAT did not accept this claim. The tribunal stated that the foreign entity was not serving as a broker or agent but was independently furnishing comprehensive procurement services using its own expertise and resources.
Hence, the services were supplied on a principal-to-principal basis and could not be categorised as intermediary services.
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The tribunal, relying on judicial precedents and the CBIC circular on intermediary services, said that the overseas entity engaged in procurement operations rather than merely facilitating transactions. Therefore, the services constituted a taxable import of services, with the place of supply being India.
Tribunal said that the taxpayer can seek a refund on an incorrect understanding of the law; however, it also said that the company is unable to establish its legal entitlement to a refund. Therefore, all appeals were dismissed, and the rejection of the Rs 13.41 crore refund claim was maintained.
| Case Title | Dow Chemical International Pvt. Ltd. vs. Commissioner of State Tax |
| Case No. | APL/2/PB/2026 |
| For the Petitioner | Mihir Prashant Deshmukh |
| For the Respondent | Shwetal Shepal |
| Mumbai GSTAT | Read Order |
