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2020 (11) TMI 1036 - AAR - GSTClassification of supply - zero rated supply/Export of services or not - activity of technical testing services carried out by the appellant - place of supply of services - liability of appellant to pay IGST on the said supply - HELD THAT - The statutory provisions vide Section 13 of the IGST Act 2017 are very clearly worded. That is sub-Section (2) states that place of supply of services except the services specified in sub-Sections (3) to (13) shall be the location of the recipient of services. Sub-Section (3)(a) is specific with regard to services supplied in respect of goods which are required to be made physically available by the recipient to the supplier in order to provide the services . The appellant has not disputed the applicability of the said sub-Section (3)(a) to their transactions in any manner. They have not disputed that the services in respect of the goods provided by the recipient are actually performed in India i.e. Goa. The outcome of the services being reports which are sent to the recipient abroad or that the service recipient is concerned only with the test-report can have no bearing or relevance once the statutory provision is clearly plainly and unambiguously worded as above and it is impermissible to expand the laid down criterion or to interpolate and insert words/phrases which are not used in such provisions. As the catena of decisions relied upon by the appellant relate to the service tax regime it does not find statutory support in the GST era. The ratio of the said decisions does not apply to the factual matrix of the extant GST statute. Hence the same do not support the case of the appellant. Whether appellant is liable to pay IGST on the supply of services? - HELD THAT - Since the supplier of service is in Goa India and place of supply of service as determined under Section 13(3)(a) of the CGST Act 2017 is also in Goa India the same falls under Intra-State supply of services as per Section 8(2) of the IGST Act 2017 whereby the provisions under Section 7(5)(c) claimed by the appellant would not be applicable. Consequently the appellant is liable to pay CGST and SGST on the aforesaid supply of service as held by the lower authority. The Ruling given by AAR Goa is maintained. The appeal filed by the appellant is rejected.
Issues Involved:
1. Whether the activity of technical testing services carried out by the appellant be treated as 'zero rated supply'. 2. Whether the appellant is liable to pay IGST or CGST and SGST on the said supply of services. Issue-Wise Detailed Analysis: Issue 1: Zero Rated Supply Relevant Provisions and Definitions: - Section 16 of the IGST Act, 2017 defines 'zero rated supply' as including the export of goods or services. - Section 2(6) of the IGST Act, 2017 defines 'export of services' with five conditions: 1. Supplier located in India. 2. Recipient located outside India. 3. Place of supply outside India. 4. Payment received in convertible foreign exchange or Indian rupees (where permitted by RBI). 5. Supplier and recipient are not merely establishments of a distinct person. Appellant's Argument: - The appellant argued that their activity qualifies as research and development (R&D) service, and the place of supply should be outside India based on Section 13 of the IGST Act. They emphasized that the ultimate deliverable is the test report sent to the recipient outside India. Authority's Findings: - The lower Authority found that the service does not fulfill condition (iii) of 'export of services' since the place of supply is in Goa, India, as per Section 13(3)(a) of the IGST Act, which states that the place of supply for services involving goods physically made available by the recipient is the location where the services are performed. - The Authority held that the services do not fall within 'export of services' and thus are not 'zero rated supply'. Appellate Authority's Decision: - The Appellate Authority upheld the lower Authority's decision, stating that the statutory provisions are clear and unambiguous. The place of supply is where the services are actually performed, which is in Goa, India. The appellant's argument regarding the test report being the ultimate deliverable was found to be irrelevant under the clear statutory language. Issue 2: Tax Liability (IGST vs. CGST and SGST) Relevant Provisions: - Section 13(3)(a) of the IGST Act, 2017: Place of supply for services involving goods physically made available by the recipient is where the services are performed. - Section 8(2) of the IGST Act, 2017: Defines intra-state supply of services. - Section 7(5)(c) of the IGST Act, 2017: Defines inter-state supply of services. Appellant's Argument: - The appellant argued that even if the service is not zero rated, it should be treated as inter-state supply and attract IGST, not CGST and SGST. Authority's Findings: - The lower Authority determined that since both the supplier and the place of supply are in Goa, India, the supply is intra-state, attracting CGST and SGST. Appellate Authority's Decision: - The Appellate Authority upheld the lower Authority's ruling, confirming that the supply is intra-state and the appellant is liable to pay CGST and SGST. Conclusion: The Appellate Authority maintained the ruling of the lower Authority, rejecting the appeal. The technical testing services do not qualify as 'zero rated supply' since the place of supply is in Goa, India, and the appellant is liable to pay CGST and SGST on the services provided.
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