TMI Blog2018 (7) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... y’ has made a very clear observation that the illustrative indicators are not determinative but indicative of bundling of services in ordinary course of business. Hence, when the foreign ship-owner himself perceives the situation as being so, we need not even look at how the other players in the field, view the services to be. The requirement of ‘principal supply’ would, therefore, not be met in the facts of the instant case - the provision of services under the impugned agreement would not be a composite supply under the GST Act. Where services are provided to foreign ship owners distinctively as supply of consultancy service and support service with separate and demarcated fees for their consultancy service and for support service: (a) Whether consultancy service will qualify as business consultancy service in terms of the scheme of classification of services (Annexure to Notification 11/ 2017 Central Tax (Rate), dated 28th June, 2017? - Held that:- The business consultancy services of sr. no.299 are covered under the Group “Management consulting and management services” - A general understanding of the term ‘Management Consultancy’ is that it is the practice of keeping organi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by Five Star Shipping, the applicant, seeking an advance ruling in respect of the following question : A.1 Whether Marine Consultancy Service ( MCS ) provided to foreign ship owners constitutes composite supply with the principal supply of consultancy service? A.2 Whether the place of supply of MCS (as a composite supply) will be determined in terms of Section 13(2)(a) of the Integrated Goods and Services Tax, 2017 ( IGST Act ), i.e. the location of recipient of service ? B.1 In the alternate, where services are provided to foreign ship owners distinctively as supply of consultancy service and support service with separate and demarcated fees for their consultancy service and for support service: a. Whether consultancy service will qualify as business consultancy service in terms of the scheme of classification of services [Annexure to Notification 11/ 2017 - Central Tax (Rate), dated 28th June, 2017? b. Whether the place of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and freight markets, track movement of ships and cargoes and disseminate such information to the company. ii. Track, collate, analyse and monitor port development and logistics data originating from reliable source and update future trends iii. Monitor world-wide economic development, bulk commodity trade pattern development iv. Identify and provide information on port costs, bunker (fuel), trend, cost estimation and analysis v. Monitor voyage execution for smooth and efficient operations so as to optimize performance for the ship owners. vi. Examine lay time calculations and arrange for accounts reconciliation for objective of eventual settlement. vii. Preliminary evaluation of cargo volume, trade patterns, trend in commodity movement, port congestion, global and regional economic development and analysis viii. Techno commercial assessment of vehicle type utilization opportunities, infrastructure development in various regions, geographical impact on global trade in bulk commodities arising from weather, piracy, war, conflict, any other causes which have prospects to impact trade 4. Fees for the abovementioned services is fixed pre-hand, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm supply is defined in Section 7 of the CGST Act to include: (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business: (b) (c) : and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II; Relevant definition as set out in CGST Act and IGST Act 8. Section 2(30) of the CGST Act defines the term composite supply to mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; . 9. Section 2(74) of the CGST Act defines the term mixed supply to mean two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply . 10. In terms of Section 2(13) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Service Code to each service. The Annexure also provides description of service and supports in determining the nature of service and rate of GST payable qua a service. ANNEXURE II Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of the question A. Interpretation of law and facts 1. MCS provided by the Applicant constitutes of consultancy service and support service. Consultancy service provided by the Applicant includes analysing commodity, shipping and freight market, finding potential charterers for the foreign ship owners. Such supply of consultancy service to the foreign ship owners constitutes a substantial portion of the Applicant s business. For this the Applicant has trained professional research analysts stationed at its office who keep them abreast with market trends and help the foreign ship owners with valuable information re their business. The Applicant has appointed research analysts on the payroll to undertake market research, track, collate, analyse and monitor port development and logistics data to update future trends to ship owners and also customise this information as per the custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressly understood that the consultant has fiduciary obligation to the Company (foreign ship owner) based on contractual terms of this Agreement: that Consultant s role is to provided independent advice uninfluenced by commercial concerns; and that service as a Consultant does not require him to be an advocate for the Company or its products in any forum, public or private. 6. Therefore, it is evident from the terms of the Agreement that supply of MCS by the Applicant is on its own account and the Applicant orchestrates the entire service directly to the foreign ship owners. The foreign ship owners approach only the Applicant in case there are any issues that need to be addressed or ironed out and the Applicant remains answerable to the ship owners from the point of entering into the contact for supply of MCS. Consequently, a significant as also certain degree of service is provided by the Applicant directly to and quite clearly directed at the foreign ship owner. 7. The services supplied by the Applicant are described in para 3 of Annexure I and may be refereed to understand that the entire gamut of services supplied by the Applicant. Each service listed therein may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; 10. Supply of MCS by the Applicant consisting of consultancy service and support service will be construed as a supply of composite service made by the Applicant as these services (i.e. consultancy service and support service) are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which (i.e. consultancy service) is the principal supply. 11. As stated in Annexure I, the Applicant s activities of supply of MCS to foreign ship owners comprises of collecting intelligence on commodity shipping and freight market, track movement of ships, maintain information about the ports and the facilities provided the ports, monitor trade pattern and disseminate the information to foreign ship owners. MCS constitutes consultancy service provided to foreign ship owners as a specialist in the freight market and support service provided to the mtomonitor voyag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided to foreign ship owner shall be the location of the recipient of service in terms of Section 13(2)(a) of the IGST Act (i.e. the default rule), as supply of MCS does not qualify in the specific place of supply rules prescribed under Section 13 of the IGST Act. Therefore, when MCS as composite supply (consisting of consultancy service and support service) is supplied by the Applicant from India to a foreign ship owner, the place of supply of service will be the location of the foreign ship owner located outside India. Resultantly, no GST is payable on this transaction and the transaction will qualify as export of service subject to fulfilment of criterion prescribed in this regard under Section 2(6) of the IGST Act. As the Applicant is able to satisfy the above mentioned criterion, supply of MCS by the Applicant to the foreign ship owner is an export of service. MCS does not qualify as an intermediary service 16. In mode of assumption, if support service provided by the Applicant to the foreign ship owner is seen as a principal supply, support service cannot be an intermediary service and therefore MCS in entirety cannot be an intermediary service. 17. Supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign ship owners. These ship owners independently enter into an agreement with the charterers for transportation of goods by vessel, post negotiating terms of supply of service. Once the foreign ship owner and the charterer concludes an agreement for transportation of goods by vessel, the Applicant steps back and supports the foreign ship owner in monitoring the voyage, calculating lay time and reconciling accounts which benefits the foreign ship owner in the settlement of fee between the foreign ship owner and the charterer. 21. Therefore, the Applicant is only introducing the foreign ship owner and the potential charterers which may be one or more than one in number. The foreign ship owner is at liberty to choose from the recommended charterers, negotiate the terms of supply of service. The foreign ship owners may decide not to provide service to any of the charterers recommended by the Applicant. The Applicant is neither arranging nor facilitating the supply of service between the foreign ship owner and the charterer. The role ends at the time of introduction of two parties (i.e. foreign ship owner and the charterer) and resumes once an agreement is signed between them, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t price The nature and value of supply is independently negotiated between the foreign ship owners and the charterer. The Applicant is not equipped/ empowered by the foreign ship owner to negotiate the terms of contract between the foreign ship owner and the charterer. Therefore the supply is not to facilitate but to supply and service its customers i.e. foreign ship owners. The supply of goods or services or both or securities should not be on own account The value of an intermediary s service should be identifiable and distinguishable from the main supply that he is arranging, but can be based on an agreed percentage of the sale or purchase price, The service provided by the intermediary on behalf of the principal should be clearly identifiable The Applicant is directly providing its support service to the foreign ship owner and has no privity of contract between with the charterer. The service is provided on own account and its service is the key service or main service. The fee of Applicants service is based on an agreed percentage of the supply of service between the foreign ship owner and the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the erstwhile law 27. Up to 30th June, 2012 (pre-negative list regime), provision of MCS by the Applicant was classified as BAS in terms of Section 65(19) of the Act which means any service in relation to: i. Promotion or marketing or sale of goods produced or provided by or belonging to the client or ii. promotion or marketing of service provided by the client: or iii. any customer care service provided on behalf of the client: or iv. procurement of goods or .services, which are inputs for the client: or v. production or processing of goods far, or on behalf of, the client: vi. provision of senate on behalf the client: or vii. a service incidental or auxiliary to any activity specified in .sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management 28. MCS provided by the Applicant to the foreign ship owner was treated as export of service in terms of Rule 3(iii) of the Export of Service Rules, 2005 ( Export Rules ) subject to the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax was payable on this transaction. MCS provided by the Applicant to overseas ship owner was treated as export of service in terms of Rule 6A of the Service Tax Rules, 1994 ( ST Rules ) extracted below: 6A. (1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- (a) the provider of service is located in the taxable territory , (b) the recipient of service is located outside India, (c) the service is not a service specified in the section 66D of the Act, (d) the place of provision of the service is outside India, (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act 33. Therefore, the position adopted by the Applicant in terms of the extant GST law is in line with the position of the Applicant under the erstwhile law. This has been disclosed by the Applicant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 38. As a result of these being the positions, when the service is provided by the Applicant to a foreign ship owner, the transaction will not be liable to GST, as the place of supply of service (location of service recipient) is outside India in terms of Section 13(2)(a) of the IGST Act. 39. Alternatively, where supply is distinctively provided (i.e. as consultancy service and support service for two fee terms associated with each) and support service by the Applicant is construed as intermediary service, the Applicant should offer (only) the revenue from the support services to GST since the place of supply of intermediary service is the location of supplier of service in terms of Rule 13(8)(b) of the IGST Act, whereas consultancy service will continue to be outside the ambit of GST, in view of the applicable place of supply rule i.e. Section 13(2)(a) of the IGST Act, which is outside India. Prayer 40. In view of the factual matrix in the Applicant s case and the extant legal provisions, the Applicant seeks an Advance Ruling from this Hon ble Authority in respect of the composite supplies of MCS by the Applicant to foreign ship owners. Submission dt.02.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fuel), trend, ant estimation and analysts v. Preliminary evolution of cargo volume trade patterns, trend in commodity movement, port congestion, global and regional economic development and analysts vi. Techno commercial assessment of vehicle type utilization opportunities, infrastructure development in various regions, geographical impact on global trade in hulk commodities arising from weather , piracy , war, conflict any other causes which have prospects to impact trade The foregoing services are provided as a single offering of Consultancy service, failing which the provision of service will not be meaningful. Consultancy service helps the client (i.e. FSO) with market intelligence and trade analysis, etc. which helps them in finding potential charterers. Thus, the Consultancy service provided by FSO in tune helps the FSO to augment its business and expand its client base and all these services are provided as one service. 3.2 Support services provided by FSS to FSO (client) is usually at the end of the employment of vessel and involves FSS monitoring voyage execution, examining the lay time calculations and arranging for reconciliation of accounts to crystaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 4.4. Service of Applicant to FSO is value based and market driven 2 and requires devoting time and attentions wherein FSS is not acting as an advocate to the FSO 4. Applicant has a fiduciary relationship with the FSO and Applicant carries risks under the Agreement, which may be that inputs of Applicant may not be proper or meet the requirements of FSO or the market conditions may deteriorate, in which case no fees is payable to Applicant, since no engagement is crystallized by FSO. 5. Timing of payment 5.1. Fees for provision of MCS becomes payable to Applicant upon conclusion of contract between the FSO and successful employment with the potential charterers identified by Applicant or otherwise, and completion of support activities. Only then has all contractual obligations of Applicant been completed. 6As per the ever evolving and highly competitive industry, fees are payable upon conclusion of the contract i.e., it is paid upon the agreed additional support services, lay time calculations, etc. being provided to FSO by FSS. As an industry and market practice, fees is a percentage of revenue, which has been contractually agreed between the FSO and the Chartere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onjunction with each other in the ordinary course of business.one of which is the principal supply . A mixed supply is the supply of two or more services made in conjunction with each other by a taxable person for single price where such supply does not constitute a composite supply. 9. A composite supply is defined in Section 2(30) of the CGST Act. as below: Section 2(30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply 10. The concept of composite supply is similar to the concept of naturally bundled service under the erstwhile negative list regime. Applicant is supplying various services to the FSO (refer paragraph 3 above). These services consisting of Consultancy service and Support service is provided is provided together to the FSO in conjunction as one bundle of service. Conjunction means condition of being joined . MCS supplied by the Applicant is joined together where Consultancy service is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... augments their business and it is convenient to pay singular consideration which is a percentage of the value of freight received by the FSO. Majority of similar service provider in the industry provide similar bundle of service . Service provided by Applicant to FSO has an evolving nature. Previously, depending upon the market scenario the requirement was to find charterers, however, post global financial crisis about a decade ago, there is an increase in competition and service expectation by the FSO thus, Consultancy service is being provided with other value- added services. The FSO engages Applicant for Consultancy services and subsequent Support service usually provided in tandem. FSS is engaged in cross border supply of service using latest technology and methods. More than domestic industry, Applicant has to compete on global platform to international standards to meet FSO requirements. One service is the main service and other services provided in the bundle are incidental or ancillary to the main service. As discussed above, Consultancy service provided by Applicant to FSO expands its business viability and profitability. FSO s advice on vessel positioning, bunke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the transaction inasmuch as reconciliation and calculation of lay time to receive charter hire earnings for the employed vessel. Thus, the supply is intrinsically linked and are integral to one another and so clearly in conjunction. 14. The Applicant carries the risk as the Service provider providing MCS. The Applicant is providing MCS to the FSO pursuant to which FSO generates employment for its vessels. Applicant s consideration for MCS is paid by the FSO only when the advice of Applicant helps the FSO to find a Charterer and independently conclude contract with such Charterer. Applicant and the FSO are in a fiduciary relationship in terms of which the Applicant is obligated to act for the benefit and interest of FSO. 15. In view of the aforesaid facts, MCS service provided by FSS to FSO consisting of consultancy service and Support service for which a unified consideration is charged, qualifies as naturally bundled service supplied in conjunction with each other, one of which (i.e. Consultancy service) is the principal supply. Thus, MCS supplied by FSS to FCO would qualify as composite service. 16. The Applicant in this regard would like to bring to your attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify in the specific place of supply rules prescribed under Section 13 of the IGST Act. Therefore, when MCs as composite supply (consisting of consultancy service and support service) is supplied by the Applicant from India to FSO located outside India, the place of supply of service will be the location of the FSO located outside India. 20.2. MCS does not qualify under Section 13(3)(a) of the IGST Act i. Section 13(3)(a) of the IGST Act provides that where services are supplied in respect of goods which are to be required to be made physically available by the recipient of service to the supplier of service, or to a person acting on behalf of the supplier of service in order to provide the service, the place of supply of service in such case shall be the location where the services are actually performed. Section 13(3) (a) In such of IGST Act shall is extracted below: 13(3) The place of supply of the following services shall be the location where the services are actually performed, namely:- (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or the cargo is ever transferred to Applicant for provision of its service to FSO. The activity performed under MCS by the Applicant is not in the nature of stevedore who is a handler of goods on the maritime movement of commodities and helps in loading and unloading of vessels. Unlike stevedore, the Applicant is providing abstract MCS which does not involve the Applicant to touch the cargo of charterer or vessel of the FSO. The example above covers Consultancy service which is delivered to the customer on pen drive to the customer. In such case, the rule on performance-based service will not apply has been specifically classified. Similarly, FSS provides MCs service which is delivered to FSO via email and performance-based rule i.e. Section 13(3)(a)of the IGST Act would not apply on this transaction. Therefore, literally as also by Education Guide reference, Section 13(3) of the IGST Act cannot be applied. 20.3. MCS does not qualify under Section 13(8) (b) of the IGST Act i. Section 13(8) (b) of the IGST Act would apply on supply of service which qualifies as intermediary service . an intermediary service in terms of Section 2(13) of the IGST Act, extracted below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(6) of the IGST Act and would qualify as export of service which is zero rated. III MCS service provided by Applicant to FSO qualifies as Support service in relation to transport, other than Goods transport Agency ( GIA ) 23. Notification No. 1/ 2017 Central Tax (Rate) dated June 28, 2017 ( the Notification ) provides for the GST rate for service based on the classification of services read with Annexure to the Notification. Heading 9967 at Serial No. 11(ii)of this Notification deals with support services in transport, other than GTA . Given that MCS service provided by Applicant to FSO is in relation to transportation of goods by vessel only, in our submission, Heading 9967 under which SAC 996759 at Serial No. 148 of the Annexure to the Notification ( other supporting services for water transport nowhere else classified ) is the specific entry which provides the appropriate description of activities provided by Applicant and therefore, MCS will be classified therein and leviable to GST at the rate of 18%. General Agreement on Trade in Services 24. To substantiate the submission, reference is made to classification as per Service sectoral classification lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specific place of supply rules prescribed under Section 13 of the IGST Act, resultantly, place of supply of MCS would be determined in terms of Section 13(2) of the IGST Act, which is the default rule and provides that the place of supply be the place of the recipient of service, which in the facts in hand is the place of the FSO which is located outside India. iii. MCS would be classified under SAC 996759 at Serial No. 148 of the Annexure to the Notification (i.e. other supporting services for water transport nowhere else classified ) as this is the specific entry which provides the appropriate description of activities provided by Applicant and therefore, MCS will be classified therein. 03. CONTENTION AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- Submission of NIL date Qs No Question raised by the applicant Submission as per ACT RULE A.1 Whether Marine Consultancy Service ( MCS ) provided to foreign ship owners constitutes composite supply with the principal supply of consultancy service? The defini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the scheme of classification of services [Annexure to Notification 11/ 2017 - Central Tax (Rate), dated 28th June, 2017? Heading 9983 -residual entry (ii) (b) Whether the place of supply of such consultancy service will be the location of recipient of service in terms of Section 13(2)(a) of the IGST Act? Section 13(2) of the IGST Act which is the default rule for determining the place of supply of services where the location of supplier or location of recipient is outside India, the place of supply of services except the services specified in sub-section (3) to (13) shall be the location of the recipient of services. (c) Whether support service qualifies as intermediary service in terms of Section 2(13) of the IGST Act? And, if ruled that the support service qualifies as an intermediary service, the place of supply of support service as intermediary service will be the location of supplier of service in terms of Section 13(8)(b) of the IGST Act? Section 2 (13) of IGST Act intermediary means a broker, an agent or any other person, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 In the alternate, where services are provided to foreign ship owners distinctively as supply of consultancy service and support service with separate and demarcated fees for their consultancy service and for support service: (a) Whether consultancy service will qualifies as business consultancy service in terms of the scheme of classification of services (Annexure to Notification 11/ 2017 Central Tax (Rate), dated 28 th June, 2017? (b) Whether support service qualifies as intermediary service in terms of Section 2(13) of the IGST Act? We shall now discuss each of the questions. Question 1 Whether Marine Consultancy Service ( MCS ) provided to foreign ship owners constitutes composite supply with the principal supply of consultancy service? The applicant has tendered a sample Consultancy Agreement dated 01 March, 2017 entered between the applicant ( The Consultant )and foreign ship owner Singapore Shipping International Pte. Ltd. ( The Company ) pursuant to the MV AM OCEAN PRIDE/ MARUBENI CEMENT CHARTER PARTY CONTRACT DATED 3 RD MARCH 2017. The important clauses from this Agreement dt.01.03.2017 could be seen to have an understanding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the Company s activity. The consultant will be used to augment The Company resources, and will provide qualified technical and professional personnel to perform the duties and responsibilities assigned under this agreement. The Consultant is obliged to provide technically professionally qualified staff in every way proficient, individually or collectively as a team to render to The Company the required standard of Advisory Service. The Consultant shall ensure that competent technical professionally qualified team of Chartered Accountants, Master Marine and/or Professional Marine Engineer with support associates having at least qualified at Narotham Morarjee Institute of Shipping or equivalent overseas qualification shall attend to render advisory service. 3. Compensation and reimbursement. In consideration of the services to be provided by Consultant to The Company hereunder, The Company shall pay unless otherwise agreed in each particular charterparty contract to Consultant a Fee of 1.25% of Gross Revenue ( Gross Revenue meaning the freight, dead freight and demurrage received under contracts fixed through the Consultant). The Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould Consultant, in the course of providing Services, invent or participate in inventing modifications or improvements to The Company resources, The Company reasonably seeks to secure such improvements for its own use and practice. At the same time, The Company understands and acknowledges that Consultant has pre-existing and on-going obligations to independent research, collaborative agreements within the scope of certain policies. These obligations include a duty on the part of Consultant to disclose and assign to The Company any proprietary rights arising during the course of such engagement and any overlapping consulting arrangements (b) However, the parties agree that it is mutually beneficial that Consultant be able to participate fully in providing Services, as stated herein, without being obligated to constrain her or his comments or contributions based upon the complexities of applying these conflicting obligations to intellectual property ownership. The Agreement that result directly from Confidential Information provided by Consultant pursuant to this Agreement shall reside with `The Company . 8. Confidential Information (a) The parties acknowledge t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Company and in accordance with all applicable polices of The Company . (e) The parties hereby agree that this Agreement and the provisions hereof shall be construed in accordance with the laws of England. Arbitration in Singapore, as per English law, conducted in accordance with rules of London Court of Arbitration in Singapore, as per English Law, conducted in accordance with rules of London Court of International Arbitration (LCIA ). Each party to appoint their own Arbitrator and in case of disagreement, the matter will be referred to Umpire whose decision will be final and binding. (f) The parties acknowledge that the Services are Professional Technical in nature, and that from Consultant s perspective the specific identify of The Company including its leadership, corporate culture, staff and reputation, is material to Consultant s choice to enter into this Agreement. Therefore the parties expressly agree that no party may assign this Agreement without the written consent of the other. (g) The Consultant shall conduct all activity in the sole best interest of The Company . Exhibit A Description of Consulting Activities Nature of Services: 1) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable supplies are supplied in conjunction with each other in the ordinary course of business; one of these taxable supplies is a principal supply; The aforesaid parameters of a composite supply need to be applied to the facts at hand. If we look at the agreement, it says that the foreign ship owner appoints the applicant as a consultant and technical advisor to perform the consulting services specifically set out in Exhibit A attached to the Agreement. Thus, the supply of services rendered by the applicant would be governed by this Exhibit A. At the cost of repetition, let us reproduce the Exhibit A hereunder to understand the scope of supply Exhibit A Description of Consulting Activities Nature of Services: 1) As Specialists in freight market movement, the consultant will analyse commodity, stripping and freight markets track movement of ships and cargoes and disseminate such information to The company . 2) Track, collate, analyze and monitor Port Development Logistics data originating from reliable source and update future trends 3) Monitor worldwide Economic Development, Bulk Commodity Trade pattern development 4) Identify and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olume, trade patterns, trend in commodity movement, port congestion, Global as well as Regional economic development and analysis 6) Techno-Commercial assessment of vehicle type utilization opportunities infrastructure development in various regions Geographical impact on global trade in bulk commodities arising from weather, piracy, war, conflict or any other causes which have prospects to impact trade. Support Services 1) Monitor Voyage Execution for smooth and efficient operations. 2) so as to optimize performance for The company . 3) Examine lay time calculations and arrange for accounts reconciliation for objectives of eventual settlement. The above services, as can be seen, are falling in Exhibit A which defines the services to be performed by the applicant. The applicant has contended that supply of Marine Consultancy Services (MCS) consisting of consultancy service and support service is a composite supply as these services (i.e. consultancy service and support service) are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which (i.e. consultancy service) is the principal supply. Having a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, it is clear that the services as set out in Exhibit A cannot be treated as a composite supply. The essential ingredients of a composite supply are the taxable supplies are naturally bundled; one of these taxable supplies is a principal supply Even if the applicant is called on to do all of the services, the same would still not amount to a composite supply as the foreign ship-owner s natural course of business as understood from the agreement reveals that the services may or may not be assigned to the applicant or could be got done from outside, too. Thus when part of the services are performed by the applicant and the remaining by others, each has equal importance in terms of delivery thereof. By the specific design of the agreement in terms of the convenience of the foreign ship-owner, there cannot be identified any service which could be said to be a principal supply. The perception of the service receiver which is the foreign ship-owner in the instant case that the services need not be bundled and could be got performed from different service providers or from his own staff, too. We see that the flyer on composite supply and mixed supply has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are covered under the Group Management consulting and management services . A general understanding of the term Management Consultancy is that it is the practice of keeping organizations to improve their performance, operating primarily through the analysis of existing organizational problems and the development of plans for improvement. As a result of their exposure to and relationships with numerous organizations, consulting firms are typically aware of Industry Best practices. The consultancies may also provide organizational change management assistance, development of coaching skills, process analysis, technology implementation strategy development or operational improvement services.. Management Consultants often bring their own proprietary methodologies or frameworks, to guide the identification of problems and to save as the basis for more effective or efficient ways of performing work tasks. Thus, in the present case, it is very apparent that the consultancy services being provided by the applicant are not in the nature of guiding the ship owning company in the management of the ship owning company but are only in the nature of consultancy in respect of opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 157 996793 Other goods transport services 158 996799 Other supporting transport services nowhere else classified 296 Heading 9983 Other professional, technical and business services 345 Group 99837 Market research and public opinion polling services 346 998371 Market research services 296 Heading 9983 Other professional, technical and business services 356 Group 99839 Other professional, technical and business services 359 998393 Scientific and technical consulting services 364 998399 Other professional, technical and business services nowhere else classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices: 1. As Specialists in freight market movement, the consultant will analyse commodity. shipping and freight markets track movement of ships and cargoes and disseminate such information to The company . 2. Truck, collate, analyze and monitor Port Development Logistics data originating from reliable source and update future trends 3. Monitor worldwide Economic Development Bulk Commodity Trade pattern development 4. Identify and provide information on Port Costs, Bunker (fuel) trend, Cost Estimation Analysis. 5. Monitor Voyage Execution for smooth and efficient operations, 6. so as to optimize::e performance for The company . 7. Examine lay time calculations and arrange for accounts reconciliation for objectives of eventual settlement. 8. Preliminary evaluation of cargo volume, trade patterns, trend in commodity movement, port congestion, Global as well as Regional economic development and analysis 9. Techno-Commercial assessment of vehicle type utilization opportunities infrastructure development in various regions, Geographical impact on global trade in bulk commodities arising from weather, piracy, war, conflict or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooth and efficient operations and Examination of lay time calculations and arranging for accounts reconciliation for objectives of eventual settlement, are such services which cannot be performed until and unless the applicant interacts and works in coordination with the ship charterers on behalf of the ship owners. Thus from the very nature of support services that are being provided by the applicant, as visible from the terms of agreements as referred above and submitted to this authority, it is clear that the support services being provided by them would be intermediary services and the applicant would be covered in the definition of an intermediary in terms of Section 2(13) of the IGST Act, 2017. Having seen thus, we would have to answer the question in the affirmative. 6. In view of the deliberations as held hereinabove, we pass the order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-18/2017-18/B- 26 Mumbai, dt.18/04/2018 For reasons as discussed in the body of the order, the questions are answered thus Q.1 Whether Marine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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