2019 (11) TMI 476 - AAAR - GST

Export of services - photography activity being performed by the Appellant on the diamonds sent by the vendors of the R2Net - non-applicability of condition no iii) and v) of section 2(6) of IGST Act - performance based service - place of supply of services - recipient of service - challenge to AAAR Decision. HELD THAT - The AAR observed that since the service performed by the Appellant viz.-photography service is in relation to the performance on goods in this case the diamonds which are being made available to the supplier of the service for the performance of the said service the place of the supply of service will be the location where the service is actually performed. Since the goods are made available to the supplier of the service in the state of Maharashtra the place of supply in the present case will be Maharashtra - Further since the location of the supplier of the service is in Maharashtra and the place of the supply of the service is also in Maharashtra it was held by the AAR that the said supply of the Appellant will be treated as an Intra - State supply in accordance with the provision of Section 8(2) of the IGST Act 2017. The AAR while answering the second question asked by the Appellant wherein the Appellant had asked whether the supply made by them will be a zero rated supply i.e. export within the meaning of Section 2(23) read with Section 2 (6) of the IGST Act 2017 held that the supply of the Appellant will not qualify as export of service as the two of the 5 conditions prescribed for the export of a services as laid out in Section 2(6) of the IGST Act 2017 are not being satisfied by the Appellant in as much as (i) the place of the supply of the service is not outside India and also (ii) the supplier of service and the recipient of service are merely establishments of a distinct person in accordance with explanation 1 in section 8 of IGST Act. Whether we have jurisdiction to decide the nature of the levy i.e. CGST and SGST or IGST to be imposed on any supply of goods or services or both or not? - HELD THAT - The question on determination of the place of supply has not been covered in the set of questions on which the advance ruling can be given. Therefore we cannot give any opinion or verdict on the question which involve the determination of the place of supply of the goods or services or both. Determination of place of supply - HELD THAT - Since we do not have jurisdiction to determine the place of supply of services or goods or both no ruling on this particular question can be passed by the Advance Ruling Authority. This rationale also holds true in case of the second question asked by the Appellant i.e. whether the said supply could be treated as export within the meaning of Section 2(23) read with Section 2(6) of the IGST Act 2017. Since the questions asked by the Appellant are not covered under our scope and jurisdiction no ruling can be passed in the instant matter.

Summary

Issues Involved:
1. Applicability of CGST and SGST or IGST on the supply of photography services.
2. Determination of whether the supply qualifies as an export of services.

Issue-wise Detailed Analysis:

1. Applicability of CGST and SGST or IGST on the supply of photography services:

The Appellate Authority for Advance Ruling (AAAR) examined whether Segoma Imaging Technologies India Pvt. Ltd. (Segoma India) should charge CGST and SGST or IGST on its photography services. The AAAR noted that the determination of the place of supply is crucial to decide the nature of the tax levy. According to Section 13(3)(a) of the IGST Act, the place of supply for services involving goods physically made available to the service provider is the location where the services are performed. The AAAR observed that since the diamonds are physically made available in Maharashtra, the place of supply is Maharashtra. Therefore, the supply is considered an intra-state supply, attracting CGST and SGST.

However, the AAAR highlighted that the determination of the place of supply is beyond its jurisdiction as per Section 97(2) of the CGST Act, which does not cover questions regarding the place of supply. Consequently, the AAAR concluded that it could not pass a ruling on the applicability of CGST and SGST or IGST for the photography services provided by Segoma India.

2. Determination of whether the supply qualifies as an export of services:

The AAAR also addressed whether the photography services provided by Segoma India qualify as an export of services under Section 2(6) of the IGST Act. The conditions for export of services include that the place of supply must be outside India and the supplier and recipient should not be merely establishments of a distinct person. The AAAR noted that the place of supply is within Maharashtra, and Segoma India and Segoma Israel are considered distinct persons, as they operate on a principal-to-principal basis.

However, since the determination of the place of supply is beyond the AAAR's jurisdiction, it could not definitively rule on whether the services qualify as an export. The AAAR emphasized that the Advance Ruling Authority should not have passed any ruling on these questions, as they involve the determination of the place of supply, which is outside its scope.

Order:

The AAAR quashed the impugned ruling passed by the Advance Ruling Authority, stating that the questions asked by the appellant are not covered under its scope and jurisdiction. Therefore, no ruling can be passed on the applicability of CGST and SGST or IGST and whether the supply qualifies as an export of services.