In W.P. (C) 6838/2022 -DEL HC- Delhi High Court rules M/s Ohmi Industries not an intermediary for Market Research Services to OHMI, Japan; Orders refund of Integrated Tax with interest
Justice Vibhu Bakhru & Justice Amit Mahajan [29-03-2023]

Read Order: M/s Ohmi Industries Asia Private Limited V. Assistant Commissioner, CGST

Chahat Varma

New Delhi, July 10, 2023: The Delhi High Court has ruled in favour of M/s Ohmi Industries Asia Private Limited (petitioner), stating that the petitioner cannot be considered an intermediary in relation to the provision of Market Research Services to OHMI Industries Ltd., Japan (OHMI, Japan). Consequently, the court has directed the Assistant Commissioner, CGST to process the petitioner's claim for refund of integrated tax, for Market Research Services, along with interest.

Briefly stated, the petitioner, a company incorporated in India, provided services to its affiliated entity, OHMI, Japan. The petitioner had two separate agreements with OHMI Japan, one for Business Support Services and another for Market Research Services. The petitioner filed a refund application for integrated tax on zero-rated supply. However, the Adjudicating Authority determined that the petitioner was rendering intermediary services by directly supporting OHMI Japan's customers. Consequently, the place of supply was deemed to be at the petitioner's place of business, leading to the rejection of the petitioner's refund application. Also, the Appellate Authority upheld the Adjudicating Authority's decision.

The division bench of Justice Vibhu Bakhru and Justice Amit Mahajan examined Section 2(13) of the Integrated Goods and Services Tax Act (IGST Act), which defines an intermediary as someone who arranges or facilitates the supply of goods and services. In this case, the bench found that the petitioner did not meet the criteria for being classified as an intermediary since they directly provided Market Research Services to OHMI Japan without involving any third party.

The bench also referred to a circular dated 20.09.2021 (Circular No.159/15/2021-GST) issued by the Central Board of Indirect Taxes, which clarified that the concept of intermediary services required a minimum of three parties. As the petitioner provided Market Research Services directly to OHMI Japan, the bench held that they could not be considered an intermediary.