GST Demand on Exported Data Management Services Set Aside by Karnataka High Court

Background of the Dispute

Iqvia Rds (Inida) Private Limited Vs Union of India came before the Karnataka High Court as a challenge to GST demands raised on data management services rendered by an Indian company to its overseas group entity.

The assessee, an Indian company, had entered into a Master Service Agreement dated 01.01.2018 with its parent entity, IQVIA Holdings Inc., located in the United States. Under this agreement, the assessee was engaged in:

  • Conducting clinical trials, and
  • Providing allied data management and IT-enabled services

The assessee’s consistent stand before the authorities was that these activities qualified as export of services under the GST framework, since the service recipient was situated outside India and the place of supply was outside the taxable territory. Accordingly, such supplies were claimed to be zero-rated and not liable to GST.

The dispute that reached the High Court was narrowly focused. Although the impugned orders contained multiple components and demands, the assessee contested them only to the extent that they levied GST on the data management services rendered to the foreign parent.

Reliefs Sought in the Writ Petitions

Two separate writ petitions were filed, namely W.P.No.31039/2024 and W.P.No.32269/2024, both arising out of different periods but involving the same core controversy about the GST treatment of data management services supplied to foreign affiliates.

Reliefs in W.P.No.31039/2024

The assessee sought, among others, the following principal reliefs:

  1. Quashing of demand order

    • Challenge to the impugned Order in Form GST DRC-07 from file No. DCCT(A)-4.4/DGSTO-4/Audit-101/2024-25 dated 27.08.2024 (Annexure-A), whereby:
      • Zero-rated supply of services was treated as intra-State supply, and
      • Alleged overstatement of ITC as per GSTR-3B vis-à-vis GSTR-2A was raised for the period April 2019 to March 2020.

  2. Declaration of export nature of services

    • A Writ of Mandamus declaring that services provided by the assessee to its foreign affiliates constitute export of services, not liable to GST in terms of Section 16 of the IGST Act.

  3. ITC entitlement

    • A declaration that the assessee had correctly availed Input Tax Credit and had not overstated the same.

  4. Challenge to Notification No.56/2023-CT dated 28.12.2023

    • Prayer to quash this notification as being contrary to the provisions of the CGST Act.

  5. Relief from interest and penalty

    • A Mandamus holding that no interest or penalty could be imposed on the assessee.

Reliefs in W.P.No.32269/2024

In the second petition, the assessee targeted assessment and appellate orders for an earlier period (July 2017 to March 2018), seeking:

  1. Quashing of rejection of zero-rated turnover

    • Challenge to the order No. ZD290624033897T dated 31.05.2024 (Annexure-A), which rejected the assessee’s zero-rated turnover claim by treating the services as supplied in India.

  2. Quashing of original adjudication order

    • Challenge to Order in Original No. DCCT (Audit)-4.2/T.No.332/2023-24 dated 13-12-2023 (Annexure-L), which:
      • Treated zero-rated turnover as intra-State supply, and
      • Held that the place of supply of services was in India for the period July 2017–March 2018.

  3. Declaration of export character

    • A Mandamus similar to the first petition, seeking a declaration that services to foreign affiliates are export of services and, under Section 16 of the IGST Act, not liable to GST.

  4. Relief from interest and penalty

    • Declaration that no interest or penalty is imposable.

Stand of the Assessee