EY India services to firm's overseas entities not liable to tax, rules Delhi High Court

In a significant development for multinationals, Delhi High Court ruled that services provided by Ernst & Young (India) to overseas EY entities are not "intermediary service" liable to tax.

Rejecting a tax tribunal's order, a division bench of justice Vibhu Bakhru and Amit Mahajan said a person who provides services, as opposed to arranging or facilitating the supply from another supplier, is not an intermediary within the definition of the Integrated Goods and Services Tax Act, 2017.

The tax authority had denied input tax credit to EY for December 2017 to March 2020 on the premise that it was an intermediary, and therefore, the place of services was in India where the petitioner's place of business is located and not where the recipient of services is located.


"This reasoning is fundamentally flawed" as the adjudicating authority had misunderstood the expression 'intermediary' as defined under Section 2(13) of the IGST Act, the bench said.