The Hon’ble Delhi High Court in the case Thales India Private Limited v. Assistant Commissioner of GST, Delhi [W.P.(C) 5563/2025, dated May 27, 2025] held that the GST Department cannot refuse to process refund on the ground that it does not accept a binding High Court decision, especially when no stay or appeal exists.
Facts:
Thales India Private Limited (“the Petitioner”) filed the present writ petition seeking implementation of a refund of ₹8,99,61,147 pursuant to the judgment dated January 7, 2025, passed by the Delhi High Court in Thales India Pvt. Ltd. v. Addl. Commissioner of CGST [W.P.(C) 16611/2024]. In that case, the Court had held that, in the absence of an invoice for services received from its foreign affiliate (the overseas group entity), the value of such services would be “deemed” to be nil, as per the second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
Following the above decision, the Petitioner filed a refund claim. However, the same was rejected by the Assistant Commissioner of CGST, Delhi and Another (“the Respondents”) in Order-in-Original No. 91/2024-25 dated April 7, 2025 (“Impugned Order”). The Impugned Order stated that the refund could not be allowed because the Department did not accept the judgement of the Hon’ble Delhi High Court in Metal One Corporation India Pvt. Ltd [W.P.(C) 14945/2023], which had been relied on by the High Court in the Petitioner’s earlier case. It was further alleged that there existed an employer-employee relationship between the foreign entity and seconded employees, and hence services of seconded employees amounted to “import of service”.
Aggrieved by this, the Petitioner filed the present writ petition.
Issue:
Whether the Department can deny refund on the ground that it does not accept a High Court decision where no stay or pending appeal exists?
Held:
The Hon’ble Delhi High Court in W.P.(C) 5563/2025 held as under:
- Observed that, in its earlier judgment dated January 07, 2025 in Thales India Private Limited v. Additional Commissioner of CGST, Audit-II, Delhi & Anr [W.P.(C). 16611/2024], it was clearly held that where no invoice is raised in respect of services rendered by foreign affiliate, the value of service would be deemed nil under Rule 28 of the CGST Rules.
- Noted that, the Impugned Order disregarded the binding nature of the Court’s earlier ruling, despite there being no stay or appeal against the same.
- Held that, the observation of the Assistant Commissioner that the judgment in Metal One Corporation (supra) not being accepted by the Department could not be a valid ground to deny refund, especially when the judgment in the petitioner’s own case relied on Metal One Corporation (supra) had attained finality and further directed that, the refund be processed and credited to the Petitioner within two months.
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