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2018 (10) TMI 1517 - AAAR - GSTClassification of supply - supplies made to overseas clients known as Foreign Ship Owners (FSO) - principal supply is consultancy service - composite supply or not - export of service or not - bundled service or not - appellant was treated as bundled service of Consultancy Service and Support Service, wherein Consultancy Service was the principal service giving essential characteristics to MCS - place of provision of services - applicability of Rule 3 of Place of Provision of Service Rules, 2012 - whether the place of provision of service was the place of FSO, which was outside India. Held that:- It is conspicuously evident that the Appellant is acting as an intermediary for the FSO. Though the Appellant is insisting that they are not having formal contracts with any of the potential charterers of the vessels, this is not the requirement or criterion for supply of the intermediary services, as can be seen from the definition of the intermediary. The Appellant, in their appeal submissions, have also been highlighting the industrial practice, wherein a FSO avails Consultancy Service and Support Service bundled together as Marine Consultancy Service from the same supplier for it increases effectiveness and helps in cost economization. However, from the study of market practices or trends in vessels chartering industry available on the website bearing address general cargoship.com/charter-markets.html, it has come to our notice that the ships are normally “fixed” on charters with the assistance of the shipbrokers, who may be the FSO’s brokers or charterers brokers. Here the FSOs’ brokers are those, who find and arrange employment for their principals’ ships and charterers’ brokers are those who find ships to carry out their principals’ requirements. The Appellant is actually facilitating the supply of the main services i.e. chartering of the vessels by the FSO to their clients i.e. charterers, thereby clearly acting as an intermediary, as the chartering of the vessels is not the main service of the Appellant, but their principal i.e. the FSO. Appellant are performing all these services on behalf of their principal i.e. the FSO, thus acting as an intermediary - The above said intermediary services can be classified under the Service Accounting Code 999799, which is “Other Miscellaneous Services”, as per the Annexure to the Notification 11/2017 -C. T. (Rate) dated 28.06.2017 as the intermediary activities cannot be classified in any other service head/group of the above mentioned Annexure. In addition to the intermediary activities, they are obliged to perform the other administrative activities like examination of lay time calculation, voyage account reconciliation for eventual settlement with the charterers, which can be classified under the service head /group ‘accounting services’ bearing the SAC 998222. The entire gamut of the activities of the appellant can be considered as composite supply of the intermediary services and accounting services, of which the intermediary service is the principal service. Ruling:- The entire gamut of services performed by the Appellant are in fact of the composite supply of the intermediary services, classified under the Service Accounting Code 999799, which is other miscellaneous services, and the accounting services under the SAC 998222, of which the intermediary service is the principal supply.
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