Infodesk India vs Union of India: Gujarat HC on Section 16 'Export of Service'

Infodesk India Pvt. Ltd, a wholly-owned Indian subsidiary providing software consultancy and content-integration services to its US parent, had its GST refund claim on "export of service" rejected by the department on the ground that the services were actually "intermediary services." This Gujarat High Court order examines whether that characterisation — and the resulting denial of zero-rated supply treatment under the IGST Act — was correct, a question with direct bearing on captive/related-party service arrangements across the IT and BPO sector.

This page is a research summary of one specific Indian tax judgment, NOT legal advice. Always verify against the full judgment and consult a professional for case-specific guidance.

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The case at a glance

• Parties: Infodesk India Pvt. Ltd vs Union Of India
• Bench: Gujarat High Court
• Date: 27 November 2025
• Court level: High Court
• Sections engaged: 2(6), 16
• Outcome: Taxpayer succeeded (appeal allowed)

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Facts of the case

Infodesk India Pvt. Ltd is registered under the CGST Act and is engaged in content integration, adding AI-driven and human-curated insight to help resolve business challenges. It is a wholly owned subsidiary of InfoDesk Inc., USA, and was established to service its parent's technical requirements — managing IT infrastructure, editorial and content-creation activities, customer support, and custom usage-report generation for the parent's clients. A services agreement dated 21 February 2011 governed the arrangement, under which the parent raised requirements through "JIRA tickets," a service-desk platform, and the petitioner's employees worked on those tickets in exchange for remuneration paid by the petitioner.

The petitioner raised tax invoices on its parent for these software consultancy services, treated the supply as "export of service" under Section 2(6) of the IGST Act (zero-rated under Section 16), and filed a refund application for accumulated input tax credit in accordance with CBIC Circulars No. 17/17/2017-GST and No. 24/24/2017-GST. The department issued a show-cause notice proposing to reject the refund both on limitation grounds and on the footing that the services were "intermediary services" rather than export of service. By order dated 13 October 2023, the refund-sanctioning authority rejected the claim on the latter ground. The appellate authority (Joint Commissioner, CGST & Central Excise (Appeals), Vadodara) upheld that rejection by order dated 27 September 2024. Since the GST Appellate Tribunal was not yet functional, the petitioner approached the High Court directly by way of writ petition.

The text preview available for this order captures the factual background and the petitioner's submissions in detail but does not extend into the Court's own reasoning paragraphs.

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Issues raised

• Whether the software consultancy services rendered by the petitioner to its US parent constitute "export of service" under Section 2(6) of the IGST Act, qualifying as zero-rated supply under Section 16.
• Whether those services were instead "intermediary services," as held by the refund-sanctioning and appellate authorities below.
• Whether the lower authorities erred by interpreting the clauses of the service agreement literally rather than in the substance in which the agreement was executed.
• Whether the refund application was barred by limitation.

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What the court held

The source's outcome classification records that the appeal was allowed — the petitioner succeeded before the Gujarat High Court. The available text of the order lays out, in detail, the petitioner's case that the services agreement with its US parent was a bipartite arrangement involving only two parties, not the three parties necessary to bring a supply within the scope of "intermediary services." The petitioner's counsel argued that the company provided the "main service" of software consultancy on its own account, with no separate ancillary service rendered between it and the parent, and that this principal-to-principal character was not altered merely because the parent routed its requirements through JIRA tickets.

The petitioner also relied on CBIC Circular No. 159/15/2021-GST dated 20 September 2021, submitting that none of the requirements set out in paragraph 3 of that circular — which clarifies what constitutes an intermediary arrangement — were satisfied on the facts of this service agreement. On this basis, it was contended that both the refund-sanctioning authority and the appellate authority had committed an error by construing the service agreement literally instead of giving effect to its substance. The recorded outcome — appeal allowed — indicates the Court accepted the position that the services fell within the scope of export of service rather than intermediary services for the purposes of the refund claim.

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Strategy observations

1. The petitioner anchored its case in the statutory definition of intermediary services, affirmatively demonstrating what the arrangement was not, rather than resting solely on a positive case for export of service.
2. Reliance was placed on CBIC Circular No. 159/15/2021-GST, using the Board's own clarificatory criteria on intermediary services to test the department's characterisation of the arrangement.
3. The petitioner drew the Court's attention to specific clauses of the services agreement (clause 1.1.1 read with clause 4.4) to argue that a substance-based reading, rather than a literal one, was required.
4. The bipartite nature of the agreement — involving only the petitioner and its parent — was used to argue that the three-party structure necessary for an intermediary relationship was absent on the facts.
5. The refund application itself was filed following the CBIC's own prescribed procedure under Circulars No. 17/17/2017-GST and No. 24/24/2017-GST, which anchored the process used before the dispute over characterisation arose.

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Why this case matters

The case sits at the intersection of two GST law questions that recur frequently for Indian subsidiaries of foreign parents: what qualifies as "export of service" for refund purposes under Section 2(6) read with Section 16 of the IGST Act, and when a service provider crosses into "intermediary" territory and loses that benefit. Captive service arrangements — where an Indian entity services its own parent's clients rather than contracting directly with those clients — are a common structure in the IT, BPO, and shared-services sectors, and the intermediary-services characterisation has been a frequent ground for refund rejection by field formations.

By accepting that a two-party services agreement, where the Indian entity performs the principal service itself rather than merely facilitating a supply between its parent and a third party, does not automatically become an intermediary arrangement, this order adds to the body of Gujarat High Court jurisprudence testing the department's application of the intermediary-services bar against CBIC's own clarificatory circular on the subject.

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Source

This case is drawn from the TaxNoticeAI structured legal corpus (16,101 Indian tax judgments, CBIC circulars, ITAT rulings, AAR rulings, GSTAT rulings), sourced from indiankanoon.org and official court portals. Original document: https://indiankanoon.org/doc/34220277/