CASE BRIEF
CASE TITLE:-
EBSCO Information Services India Pvt. Ltd. ...Petitioner
Versus
Union of India & Ors. ...Respondents
MEMO OF PARTIES:-
M/S EBSCO INFORMATION SERVICES INDIA PVT. LTD (EISI) ....PETITIONER
VERSUS
1. UNION OF INDIA ...R1
2. PRINCIPLE COMMISSIONER OF CENTRAL TAX, GST COMMISSIONERATE, CGST DELHI EAST ...R2
3. THE ADDITIONAL COMMISSIONER CGST DELHI SOUTH COMMISSIONERATE ...R3
4. THE ADDITIONAL COMMISSIONER, OFFICE OF THE COMMISSIONER OF CENTRAL GST AUDIT-II,
DELHI. ...R4
LIST OF DATES AND EVENTS:-
DATE EVENT ANNEXURES
July 2017 - Department initiated an audit of the Petitioner
March 2021 under section 65 of the CGST Act
23.11.2022 A Notice (GST ADT-01) was issued to the Petitioner P-16
intimating him about the investigation and
requesting various submissions
08.07.2024 An Audit Memo was issued, recording the P-17
observations of the audit and requesting the
Petitioner to either deposit the GST liability along
with applicable interest and penalty or submit a
reply in case of disagreement
25.07.2024 Department issued FORM( DRC-01A) followed by a P18 & P19
Corrigendum on 29.07.2024,proposing a demand of
Rs. 21,98,46,984 along with applicable interest and
penalty and providing a final opportunity for the
Petitioner to submit its reply
31.07.2024 The Petitioner, via email, filed its reply agreeing to P-20
deposit liabilities for Issues 2 and 3 while contesting
the remaining Issues (1, 4 and 5).
02.08.2024 Respondent No. 4 issued the Impugned Notice under
Section 74(1) of the CGST Act, along with Form GST
DRC-01, proposing a demand of Rs. 21,98,46,984
along with applicable interest and penalties
03.09.2024 The Petitioner filed a detailed reply thoroughly P-21
addressing all the issues raised in the Impugned
Notice.
26.11.2024 A personal hearing was conducted
10.01.2025 Respondent No. 3 passed the Impugned Order, P-1
confirming the entire demand of Rs. 21,98,46,984
along with interest and penalties on Issues No. 1, 2,
3, and 5.
BRIEF FACTS:
1. The Petitioner is a private limited company and a wholly owned subsidiary of EBSCO
International Incorporated (EII). The Petitioner challenges the Order-in-Original dated
10.01.2025 and the SCN dated 02.08.2024, issued by the Respondents under the authority of
Section 74 of the CGST Act. Through the impugned proceedings, the Respondents have
confirmed a demand of Rs. 21,98,46,984/- along with interest and penalty. Of the total
demand, 99.9% pertains to the export of services for the period from July 2017 to March
2021. Petitioner has been rendering marketing and business administrative support services
to its overseas group company, EBSCO International Incorporated. These services were
treated as exports by the Petitioner in the GST returns, and accordingly, refund claims for
the relevant period were filed from time to time. The Respondents have duly accepted this
position and sanctioned the refund claims to the Petitioner. Even for the period from April
2021 to September 2023, this position remained uncontested until the initiation of the
impugned proceedings. The Department was entitled to file an appeal under Section 107 of
the CGST Act before the First Appellate Authority. Without first exercising the statutory
remedies under Sections 107, the Respondents have directly initiated the impugned
proceedings and illegally rejected the claim of export of services in the case of the Petitioner.
The Respondents have invoked Section 74, alleging wilful suppression of facts, without
providing any evidence. The eligibility of the Petitioner for export of services has been
examined by the Department multiple times, and only after proper verification were the
refunds sanctioned. The invocation of Section 74 appears to be mechanical and an unjust
attempt to bypass the limitation period, as the limitation period for Section 73 proceedings
had already expired for periods up to March 2020 when the SCN dated 02.08.2024 was
issued. Also, the Petitioner challenges the power of Respondents to issue a single Show
Cause Notice for multiple tax periods through various judgements of Hon’ble Madras and
Karnataka High Court. The petitioner contends that the audit proceedings are arbitrary,
premeditated and wholly without Jurisdiction and directly conflict with circulars/instructions
issued by the CBIC and judicial precedents on the subject. It is further submitted that
commissioner has already exercised his review powers u/s 107(2) of the CGST Act for the
period December 2021- September 2022. The Commissioner has directed the Department to
file an appeal before the First Appellate Authority under Section 107 of the CGST Act.
LEGAL ISSUE:-
The core legal issue in this writ petition is the challenging of the legality and jurisdiction of the show
cause notice dated 02.08.2024 and the order in original dated 10.01.2025 issued under section 74 of
the CGST ACT, 2017
GROUNDS:
1. The petitioner claims the impugned order dated 10.01.2025 and Show Cause Notice
(SCN) dated 02.08.2024 are without jurisdiction and in violation of principles of Natural
Justice.
2. It is claimed that invocation of section 74 of the CGST Act which requires proof of
willful statement, misrepresentation of facts, fraud is unjustified as there is no
evidence supporting such allegations.
3. The refund sanctions claims were previously sanctioned after due verification and
no appeals were filed against them under section 107 of CGST Act. Hence the
department cannot initiate verification proceedings without challenging those
orders.
4. The department disregarded the CBIC instruction No. 03/2022 GST which mandates
filing appeals against refund orders rather than initiating recovery through Show
Cause Notices under section 74.
5. The petition cities several High Court and Supreme Court decisions holding that
recovery without appeal against a refund order are not permissible. (Patanjali Foods
Ltd. vs. Union of India, ITC vs. CCE, Honda Siel Power Products vs. Union of India)
6. The department’s reclassification of the petitioner’s export services as intermediary
services is challenged, especially since earlier refund orders had accepted them as
exports.
7. Allegations of pre mediated and arbitrary action by the department bypassing the
Statutory time limit for proceedings under section sec 73 is highlighted.
8. It is argued that most of the refunded periods (from FY 2017-18 to FY 2019-20)are
time-barred under section 73 and section 74 has been wrongly used to extend the
limitation.
9. Recovery actions initiated by lower ranking officers against decisions made by
higher ranking officers (who approved the refunds) violate the proper chain of
command under GST law.
10. Only 0.1% of the total tax demand relates to issues not concerning export
classification, and this amount had already been paid, further invalidating the need
for section 74 invocation.
