TMI Blog2018 (11) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... verseas client, and therefore applicant is clearly covered and falls in the definition of an intermediary as defined under the IGST Act. As the applicant is held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant - the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the state of Maharashtra, India. 'To qualify transaction of supply of services as export of services that transaction has to satisfy all five ingredients of the definition of export of services simultaneously. In the present case, the condition at (iii) of the above definition is not satisfied and hence without examining and getting into the contention of the jurisdictional officer with regards to condition at (v) of the said definition as to distinct person which would require more specific and detailed examination and verification on their part to get correct factual position in this regard, the services proposed to be rendered by the applicant do not qualify as 'export of services' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E 1. The Applicant M/S. Vservglobal Private Limited (hereinafter referred to as 'Vserv'), is an Indian Company having its office at Mumbai. The company is incorporated to provide back office support services to overseas companies (hereinafter referred to as 'Clients'). Clients are engaged in Trading of Chemicals and other products in International Trade. Vserv will come into picture after finalization of Purchase / Sale order by a Client. Vserv will undertake following activities for and on behalf of Clients. a) Get SDF (Sales Detail Form) PDF (Purchase Detail Form) from concerned party b) Generate order no in VOSS c) create PO (Purchase Order) SC (Sales Contract) in VOSS d) Send SC (Sales Contract) PI (Proforma Invoice) to customer get Sl (Shipping Instructions) as e) Send PO (Purchase Order) to supplier Seek PI (Proforma Invoice) Share SI (Shipping Instructions) f) Liaise with supplier for Cargo Readiness g) Liaise with inspection authorities if pre-shipment inspection is needed h) Inform Customer on tentative schedule i) Process payment request in VOSS j) send payment request to Client. k) provide forwarder/ carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. 3. A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: a) He may supply goods or services or both under bond or Letter of Undertaking, subject to such safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. As per the above stated legal provisions Export of Services is a zero rated supply. The phrase Export of Service' is defined in Section 2(6) Of the Act, ibid and read as under: (6) export of services means the supply of any service when, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) Where a supply is received at more than one establishment, whether the place of business fixed establishment, the location of the establishment most directly concerned with the receipt the supply; and (d) in absence of such places, the location of the usual place of residence of the recipient; 8 (a). The applicant is providing services to the overseas offices of recipient of services and such services are used by recipients for their business conducted by such overseas offices. The said overseas offices of recipients are covered under the definition of fixed establishment as contained in section 2(50) of the central Goods services tax act, 2017, and therefore, the said second condition is also fulfilled. The definition of fixed establishment is reproduced here for ready reference. (50) fixed establishment means a place (other than the registered place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs; 9. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last condition is that the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8. The said Explanation 1 to Section 8 of Integrated Goods and Service Tax Act, 2017 reads as under: ' Explanation 1 . - For the purposes of this Act, where a person has, - (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, Then such establishments shall be treated as establishments of distinct persons. 11 (a). As already submitted the supplier of service and recipient of services are separate incorporated companies and therefore they are not merely establishment of distinct person in terms of aforesaid statutory provisions. Thus the said condition is also satisfied. From the above discussions it is clear that the services proposed to be rendered by the applicant satisfy all the condition of Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n composite and mixed supplies. - The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies. one of which is a principal supply, shall be treated as supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 4. In the instant case, the applicant proposes to supply Business Support Service' comprising of 'Back Office Support' and Accounting' which is its Principle Supply. If these services also facilitate supply of goods then it is only an incidental supply to the Principle Supply. As already submitted, the applicant would come into picture only after finalization of Purchase / Sale deals by the clients. They said 'Business Support Services' would be provided by applicant to its client would be on Principle to Principle basis. Therefore, the instant case is covered by exclusion clause in definition of 'Intermediary' 5. It is submitted that the term 'Intermediary' was also defined in aforesaid definition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... care Center and payment processing, on principal to principal basis These services are proposed to be provided with the sole intention of promoting the brand GoDaddy US in India and thus augmenting its business in India. Therefore, these services proposed to be provided by the applicant, would support the business interests of GoDaddy US in India. 12. It has been submitted by the applicant that services to be provided by the applicant are not peculiar only in applicant's case but are provided by various Indian entities to their overseas customers in India as a single package. Further, supporting the business of GoDaddy US in India is the main service and processing payments and oversight of services of third party Call Centers are ancillary and incidental to the provision of main service, i.e., business support service. Further, applicant would provide said services as a package and the payment for the entire package would he a consolidated lump sum payment. Applicant submits that in view of all these indicators, service provided by them to GoDaddy US is a bundle of services, which is bundled in normal course of business. This point has not been controverted by the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into consideration that Authority for Advance Ruling under Service Tax was consisting of very senior Tax Officers and was headed by a retired Supreme Court Judge. Therefore, interpretation of law by such a senior body should be given due regard. Attention is also drawn to the relevant portion of judgment of Hon'ble Supreme Court in Columbia Sportswear Co, vs. Director of Income Tax, 2012 (283) E.L.T- 321 (S.C.) (copy enclosed). The Authority, thus, held that the advance ruling of the Authority is binding in the case of one transaction only and the parties involved in respect of that transaction and for other parties, the ruling will be of persuasive nature. The Authority, however, has clarified that this is not to say that a principle of law laid down in a case will not be followed in future. This decision of the Authority in Cyril Eugene Pereira, In re. (Supra) has been taken note of by this Court in Union of India Anr. v. Azadi Bachao Andolan Anr. [(2003) 263 ITR 706 at 742] to hold that the advance ruling of the Authority is binding on the applicant, in respect of the transaction in relation to which the ruling had been sought and, on the Commissioner, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit of tax paid or deemed to have been paid; (e) Determination of the liability to pay tax on any goods or services or both; (f) Whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. The issue posed by the applicant before Advance Ruling Authority, is pertains to Zero Rated supply, it means it relates to place of supply, only above stated (a) to (g) questions are sought for Advance Ruling before Hon. Advance Ruling Authority, place of supply is not covered under the above (a) to (g), hence, my office argument is the application submitted by the applicant is not maintainable. In this regard, if Advance Ruling Authority has accepted the application and treated is maintainable then my alternative submission is as under. The dealer has stated that, he has exported the services, and claiming that, the said services are Zero rated supply u/ s 16 of IGST Act 2017. As per definition u/s 2 (23) of IGST Act 2017 Zero Rated Supply , means a supply of any goods or Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) made to a registered person shall be the location of such person; (b) made to any person other than a registered person shall be,-- (i) the location of the recipient where the address on record exists; and (ii) the location of the supplier of serviced in other cases. Section 12 (1) place of supply of services where location of supplier or location of recipient is within India. Section 12 (2) place of supply of services If not prescribed in subsection (3) to (14). This section provides place of supply of services for all supplies of services where the location of supplier and recipient is in India. 1. If the location of supplier of service and the recipient is in India then the place of supply of serviced shall be determined under section 12 of IGST act. 2. when the place of supply of service cannot be determination under section 12(3) to 12(14) i.e. when there is no special provision specified for determination of place of supply then place of supply determined in section 12(2) which is as follows: a. where the services made to registered person location of such recipient. b. where the services made to person other than registered person i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adukia, and Seema Sanjau Enand Tee promoters M/S Vikudha Overseas Corporation Limited, is Vikash Balkishan Adukia, Group CEO and Mr. Deap Adukia, Group COO. Mr. Deap Balkishan Adukia is also Director of M/S Vikudha India trading Limited. From the above discussion it is clear that, the M/S Vikudha India Trading Limited, is operated through 201, Dhantak Plaza, Opp Waman Centre Makwana Road, Marol, Andheri (E), Mumbai, for M/S Vikudha Overseas Corporation Limited. The nature and scope of the works of services stated in agreement are provided by Vservglobal Pvt Ltd to M/S Vikhudha India Trading Limited, which is operated in India for M/S Vikhudha Overseas Corporation Limited. It means all services provided to M/S Vikudha India Trading Limited by the Applicant. It means location of recipient of service is in India, at 201, Dhantak Plaza, Opp Waman Center Makwana Road, Marol, Andheri (E), and Mumbai. It is also pertinent to note that, The Applicant of this ARA M/S Vservglobal Pvt Ltd, is private Limited company situated at 201, Dhantak Plaza, Opp. Waman Centre, Makwana Road Andheri (E), and Mumbai-400059 Another condition of location of the recipient of service is loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as distinct person (i.e. two different person) - Explanation 1 1. Person having establishment in India and outside India. 2. Establishment located in different states and union territory - As per section 25(5) Registration will be required to be obtained for each establishment located in different state or union territory. 3. Multiple business verticals in same state or union territory If the person is carrying out any business through its branch or agency or representational office in any territory, it will be considered as having establishment in that territory. From the above after carefully perusal of distinct person provision, M/S Vikudha Overseas corporation Limited, and M/S Vikhudha India Limited, and M/S Vservglobal Pvt Ltd, are not a distinct person, for this provision, thus there cannot be export of service to own branch outside India. Form the above aforesaid fact, and related provision under the statute, the above transaction is not qualify export of services, hence not qualified under Zero rated supply , it is Supply of Services to be treated as Intra-state. If we see the nature and scope of work, the all nature is office work, or we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement is made between the party M/S. Vikhuda Overseas Corporation Ltd. Hong Kong (Herein referred party A) and M/S. Vservglobal Pvt. Ltd. Andheri, (Herein referred party B) -This agreement is executed on 30.122017 of the office of party A situated in Hong Kong. Party A is global firm specializing in trading and distribution of chemical and Agricultural/Consumer products in different geographies. Party B is an India based corporate entity and has started its operation in the year 2017. 2. Party A is desirous of obtaining back office administrative and accounting service and party B is having necessary competence to provide the said services. As such the party A has agreed to hire the party B to provide the said services and the Party B agreed to render the same in accordance with the provision of this contract. 3. article-1 :-Object of contract:- This service agreement aims to establish terms and conditions under which the party B commits to provide for party A for the services of back office administrative and accounting support. The nature and details of services to be provided to the party A by the party B throughout this are specified in Article 2 of this contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IN (AS per website of Ministry of Commerce), and The Applicant of this ATA M/S Vserv Global Pvt Ltd, is private Limited company situated at 201, Dhantak Waman Center, Makwana Road Andheri (E), Mumbai-400059. The officer has information from the website of the client. He has also collected information to the promoters of the client and the sister concern. Based on this information the officer submits that all the above firms are related companies. He further has drawn a conclusion that the applicant is providing services to M/S. Vikudha India Trading Limited, a sister concern located in India and thus the provision of services is in India and not as export of services contended by the applicant. During the course of final hearing held on 26.06.2018 and having regards to the facts of the case applicant was called on to submit his written contention specifically insisting that how they are not covered in the definition of ' intermediary' as defined u/s.2(26) of the IGST Act. In response applicant made further submission dated 02.07.2018 which is already reproduced above. We carefully have considered rival submissions and also scrutinized in detail different clauses of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation I in section 8; In the course of final hearing a reasonable doubt was raised by the members whether the applicant is an 'intermediary' as defined under the act. On this issue the contention made by the and the jurisdictional officer is already reproduced above. It is therefore necessary first to understand the definition of 'intermediary' as defined in the act. Section 2(13) of the IGST Act: intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; In the context of definition of 'Intermediary' as mentioned above, we now examine the service agreement as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the client. Applicant commits not to disclose business dealing of client to any third party / parties Applicant and client commit not to represent each other before a third party as agent and principal of the other party and entered into any kind of binding agreements. Applicant shall receive remuneration per purchase per sale. A sum of all activities mentioned above indicate applicant as a person who arranges or facilitate supply of goods or services or both between the overseas client and customers of the overseas client, and therefore applicant is clearly covered and falls in the definition of an intermediary as defined under the IGST Act. As the applicant is held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant. In the instant case and as per applicants own admission of fact that applicant is supplier of Services, which is a corporate entity incorporated in India and having is registered office in Mumbai. We find that the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
