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2022 (12) TMI 507 - AAR - GSTLevy of IGST - reverse charge mechanism - transfer of monetary proceeds by the IVL India Environmental R&D PVT Ltd to IVL Swedish Environmental Research Institute Limited without underlying import of service - applicability of entry no. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. HELD THAT:- As per the Minimum Qualifying condition (mentioned at pars 2 D of the submissions), only wholly owned subsidiary (in this case, the applicant) of the foreign company was eligible to quote based on the credentials of its parent company/sister concern, if they submitted a certificate from the parent company/sister concern to that effect and in case the wholly owned subsidiary qualified on the basis of credentials of the Parent Company/sister concern, then the contract with MCGM was to be signed by both, the subsidiary as well as the Parent Company (if the bidder qualified on the basis of Parent Company). Thus the applicant has submitted that it was eligible to quote for the tender/contract. There is a contradiction in the submissions made in as much as in para 2D it has been submitted that the applicant was eligible to quote for the tender/contract on the basis of the credentials of IVL Sweden whereas in para 8 a it has been made clear that it was IVL Sweden which has bid for the project and the applicant, as a wholly owned subsidiary, was only supposed to execute the project - the applicant would execute the project only on the credentials and expertise of the IVL Sweden which would further imply that, without the transfer of the expertise by IVL to Sweden, the contract could not be performed. The application is silent as to how such expertise is transferred from IVL Sweden to the applicant without any supply of services or goods or both. The applicant is the one which is performing the service at the ground level and the entire support for such service is being provided by IVL Sweden who has obtained the contract on the basis of its own credentials and work experience and it is a fact that the applicant cannot provide the services under the contract without receiving support services from IVL Sweden - the services are received by the applicant from IVL to further perform its services under the contract, for which monetary proceeds flow from the applicant to IVL Sweden. In the subject case other than the service provided by the applicant to MCGM, there is a very definite service being provided by IVL Sweden, located outside India - on account of its experience, credentials and expertise to the applicant, located in India that enables the applicant to perform under the contract. Further, there is no doubt that the services are being supplied in taxable territory i.e. in India - in view of Sr. No. 1 of Notification No. 10/2017 Integrated Tax (Rate) dated June 28, 2017, since support services are being supplied by IVL Sweden, located in a non-taxable territory to the applicant the whole of integrated tax leviable under section 5 of the Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services i.e. the applicant. Thus the applicant has to pay GST on the money proceeds which is being transferred to IVL Sweden.
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