India’s GST Appellate Tribunal upholds the Revenue’s position that procurement services rendered by Switzerland-based Dow Europe GmbH to its Indian affiliate constituted an import of services — rejecting six consolidated refund appeals spanning January to June 2022 and holding that a centralised group hub providing core services to a sister concern cannot be characterised as a mere facilitator.
In a closely watched ruling, the Goods and Services Tax Appellate Tribunal’s Division Bench — comprising President Justice (Retd.) Dr. Sanjaya Kumar Mishra and Technical Member Shri Anil Kumar Gupta — on June 4, 2026 dismissed six consolidated appeals filed by M/s Dow Chemical International Private Limited, confirming the rejection of IGST refund claims totalling approximately ₹13.41 crore.
The appeals arose after Dow India concluded — following an internal review — that it had erroneously discharged Integrated GST under the Reverse Charge Mechanism on fees paid to Dow Europe GmbH, a Switzerland-incorporated affiliate that serves as the centralised procurement hub for the global Dow Group. Dow India had initially treated the payments as imports of services. It later formed the view that Dow Europe’s activities qualified as “intermediary services” under Section 2(13) of the IGST Act, which would have placed the supply outside India’s GST net entirely.
Under a Procurement Agreement dated July 1, 2021, Dow Europe was engaged to identify and approve foreign suppliers, negotiate procurement terms, review and sign contracts and purchase orders, develop procurement strategies, manage supplier relationships, and oversee quality and spend analytics. In return, Dow India paid a service fee equal to 3.5 per cent of total monthly purchases — with no fee payable in months where no procurement occurred.
Under Section 13(8)(b) of the IGST Act, the place of supply for intermediary services is the location of the service supplier. Since Dow Europe is based in Switzerland, Dow India argued the transaction fell outside India’s GST net altogether. It reversed the input tax credit previously availed and filed refund applications. Both the Adjudicating Authority and the First Appellate Authority rejected the claims, finding that Dow Europe was rendering a core procurement outsourcing service — not mere ancillary facilitation.
Before the GSTAT, counsel for Dow India argued that the statutory definition of “intermediary” is deliberately wide, covering brokers, agents, and “any other person, by whatever name called” who arranges or facilitates supply between two or more parties. The three-party structure — Dow India, Dow Europe, and the foreign supplier — together with the commission-linked fee and advance rulings from Karnataka and West Bengal (including Airbus Group India and Global Reach Education Services) were cited to support the intermediary classification.
“The manner of remuneration is a key indicator of the nature of services. A commission-based structure clearly reflects a facilitative role.”
— Shri Mihir Prashant Deshmukh, Counsel for Dow Chemical India
The Revenue’s counsel countered by pointing to Appendix 1 of the Procurement Agreement, which detailed how Dow Europe independently conducted procurement strategy development, governance, supplier risk management, analytics, strategic sourcing, and quality audits. She characterised these as substantive, core operations rather than ancillary facilitation, and relied heavily on the Karnataka High Court’s April 2025 ruling in Columbia Sportswear India Sourcing Pvt. Ltd. — which held that a group entity providing buying-support services was an independent service provider, not an intermediary.
The GSTAT acknowledged a genuine tension in the existing case law. Two competing streams have emerged: one treating intra-group facilitation as intermediary services; the other — endorsed by the Karnataka and Delhi High Courts — treating substantive support rendered on a principal-to-principal basis as independent services. The Tribunal noted that Revenue has applied these standards inconsistently depending on the direction of cross-border supply, observing that “both views cannot be taken — one view is to be taken.”
Applying the four prerequisites for intermediary classification laid down in CBIC Circular No. 159/15/2021-GST, the Bench found that while the first requirement — a minimum of three parties — was satisfied, the second was not. The services provided by Dow Europe could not be characterised as an ancillary supply facilitating a main supply between two independent principals because Dow Europe is itself a dedicated procurement hub whose very existence and purpose is to serve the global Dow Group — including Dow India — as a core, structural function of the group’s operations.
The Tribunal aligned with the reasoning in Columbia Sportswear and the Delhi High Court’s Blackberry India ruling, holding that Dow Europe renders services on its own account as an independent contractor without authority to bind Dow India. The place of supply was therefore confirmed to be India, and the transaction held to constitute an import of services outside the scope of Section 13(8)(b) — which was itself omitted by the Finance Act, 2026 with effect from March 30, 2026.
The Final Holding — Para 26 : Operative finding of the Tribunal
The Tribunal expressly held that Dow Europe’s services cannot be termed “intermediary services” and are not in the nature of ancillary services. Rather, they constitute a core service rendered by Dow Europe to a sister concern — Dow India — both being subsidiaries operating within the same global group, Dow Inc. The intra-group, global-hub character of the arrangement was itself a decisive ground for rejecting the intermediary classification, independent of the principal-to-principal analysis.
This framing is significant for practitioners. The Tribunal did not merely apply the Columbia Sportswear/Blackberry line of reasoning about independent contractors. It went a step further: where a foreign entity exists specifically as a centralised service hub for an entire global group, the very nature of that entity’s role makes it structurally incapable of being a “facilitator” between two other principals — it is itself the principal service provider to each group company it serves.
The Tribunal did take issue with one finding of the First Appellate Authority. The lower authority had partly dismissed the refund claims on the ground that Dow India had originally paid tax voluntarily and was raising the intermediary argument as an afterthought. The GSTAT rejected this characterisation, noting that Section 54 of the CGST Act expressly provides for refund of taxes paid within a prescribed limitation period, and that a bona fide change of legal interpretation cannot disentitle a taxpayer from seeking a statutory refund. That observation, however, carried no practical weight given the Tribunal’s conclusion on the substantive issue.
All six appeals were dismissed and the orders of the First Appellate Authority confirmed.
The ruling carries two practical lessons. First, where a foreign group entity functions as a dedicated centralised hub — for procurement, treasury, IT, HR, or any other shared function — serving the entire group worldwide, courts and tribunals are likely to treat its services to Indian affiliates as core imports rather than intermediary facilitation, regardless of the fee structure or three-party appearance of individual transactions. Second, the Tribunal’s pointed observation that Revenue has applied contradictory standards to outbound versus inbound intra-group services may give future litigants a basis to press for parity in cases where the flow runs the other way. The omission of Section 13(8)(b) by the Finance Act, 2026 will, going forward, significantly narrow the practical scope of such disputes.
Dow Chemical International Private Limited was represented by Shri Mihir Prashant Deshmukh and Shri Shamik Gupte. The Commissioner of State Tax, Mazgaon, Mumbai was represented by Ms Shwetal Shepal.