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2022 (3) TMI 1367 - AAR - GSTClassification of supply of services - composite supply - principal supply is supply of services or not - activity of design and development of patterns used for manufacturing of camshafts for a customer - naturally bundled services or not - intermediary services or not - HELD THAT:- The applicant, on instructions of the OEMs / Machinists and on the basis of the specifications agreed between itself and the OEM / Machinist identifies and engages a third party Indian manufacturer to manufacture the pattern and tools which are then delivered to the applicant on behalf of the overseas OEMs/Machinists (since the ownership of tools lie with OEMs/ Machinists), for use in manufacture of camshaft prototype. Therefore, the applicant on behalf of the overseas OEMs/Machinists, not only identifies third party vendors who can manufacture the pattern and tools as per the design/drawings, but also explains and closely works with third party manufacturer to develop the patterns and tools thereby engaging with the third party manufacturers for supply of tools. The applicant is not only providing services to the overseas OEMs/Machinists, but they also actively identify and closely engage with third party vendors on behalf of the overseas OEMs/Machinists. The supply in the instant case consists only of service and there is no supply of goods. Such supply of services appears to be that of an intermediary service - the Applicant is located in India and in the subject case, in respect of patterns and tools, the applicant represents it's overseas OEMs/Machinist as their representative. The applicant actively identifies and closely engages with third party vendors, for manufacture of patterns and tools; by such third party vendors (on behalf of the overseas OEMs/Machinist). Thus, the applicant is effectively connecting the third party vendors in India with the requirements of its overseas OEMs/Machinist. In the subject case the main supply would be supply of tools and patterns to the overseas customers by the third party vendors, which is not actually happening physically since the tools and patterns are moving from the third party vendors directly to the applicant. Such movement of goods to the applicant appears to be on behalf of the overseas vendors because the ownership of the tools and patterns is with such overseas vendors as submitted by the applicant. Secondly the ancillary supply would be the supply of designs and drawings of the patterns and tools by the applicant, on behalf of the overseas customers to third party vendor/s and also the activity of identifying the third party vendors who can manufacture the pattern and tools as per the design/drawings (requirements) and explaining and closely working and engaging with such third party manufacturer to develop the patterns and tools. It is very clear from the applicant's submissions that they are not providing any services on its own account. The designs are provided to the third party vendors on behalf of the overseas customers of the applicant. The service provided by them is to their overseas customers and as per the requirements and directions of its overseas principals - thus the applicant is satisfying all the conditions of an intermediary and we have no hesitation in holding that, the applicant is supplying intermediary services as per the relevant provisions of the IGST Act, 2017.
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