P&H HC Restrains Coercive Action Against Expedia in ₹511 Cr “Intermediary” Service SCN.
Issue
Whether a GST Show Cause Notice (SCN) proposing a ₹511 crore demand is legally valid, when it classifies software development services to overseas group entities as “intermediary services” in a pre-determined manner, especially when the same legal issue (based on prior orders) is already sub judice before the same High Court.
Facts
The GST department issued a Show Cause Notice (SCN) to Expedia Online Travel Services, proposing an IGST demand of approximately ₹511.93 crore for FY 2021-22 to 2023-24.
The SCN alleged that software development and support services provided by Expedia India to its overseas group entities were “intermediary services” under Section 2(13) of the IGST Act, and therefore not eligible for “export of service” status.
Expedia argued that the SCN was issued mechanically and pre-determined the issue without any independent legal or factual analysis.
Expedia further contended that the SCN merely repeated findings from earlier refund rejection orders and SCNs, which are already under challenge in separate, pending writ petitions before the same High Court.
Decision
The Punjab & Haryana High Court granted interim protection to Expedia, directing the department to take no coercive action against the company based on the SCN.
The court did not quash the SCN at this stage. Instead, it gave the Revenue additional time to file a detailed reply.
The High Court “tagged” this new writ petition with the previously filed petitions, ordering that they all be heard together on November 26, 2025.
Key Takeaways
Interim Protection Granted: The court’s willingness to grant a stay on coercive action for such a high-value SCN indicates a prima facie acceptance of the assessee’s argument that the department’s action (issuing a new SCN on an old, sub judice issue) is questionable.
“Intermediary” Status for IT Services is Highly Contentious: This case is another example of the ongoing, unresolved legal dispute over whether back-office IT/software support provided to a foreign parent company constitutes a taxable “intermediary” service or a zero-rated “export of service.”
No “Mechanical” SCNs: The department cannot mechanically issue new show-cause notices based on findings from prior orders that are themselves currently under legal challenge by the assessee in a High Court.
Matter is Sub Judice: The final decision on the core legal issue is pending. The interim order simply provides protection to the taxpayer from coercive recovery until the combined petitions are heard on their merits.