TMI Blog2018 (12) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... pt will be used by the applicant for his own interest. In fact, for performing as a pure agent they will also be receiving compensation separately in the form of fixed fees to be charged as service charges. The applicant will not be liable to pay GST on Salary amount received from RMS and disbursed to the Crew. Ruling:- GST is not applicable on Reimbursement of salary on behalf of foreign entity. - GST-ARA-34/2018-19/B-99 - - - Dated:- 24-8-2018 - SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services 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 Act and MGST Act ] by DRS MARINE SERVICES PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following issue. Whether GST is applicable on Reimbursement of salary on behalf of foreign entity. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Rules, 2017. Therefore we would be carrying out the said activity, after amending our contract with the principal. If anything contrary to the said provisions exists, kindly let us know so that we are able to properly follow the Rules and correctly pay the taxes. STATEMENT CONTAINING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED Opening of foreign currency accounts in India by ship-manning / crew management agencies Attention of Authorised Dealer Category-1 (AD Category - 1) banks is invited to Regulation 6 of Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000 notified vide Notfn No. FEMA 10/2000-RB dtd May 3, 2000, as amended from time to time, A.P. (DIR Series) Circular No. 48 dtd April 30, 2007, in terms of which general permission is available to ship-manning/ crew managing agencies that are rendering services to shipping/ airline companies incorporated outside India, to open, hold and maintain non-interest bearing foreign currency account with an AD Category - I bank in India for meeting the local expenses in India of such shipping or airline company. 2. With a view to ensuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as service charges towards disbursement of salaries. 2.6 GST as applicable. 3. Salary Reimbursement of Crew members. RMS will transfer Salary of Crews to DRS SFC A/C as a single remittance, and DRS will instruct the bank to disburse the Crew Salary as per list provided by RMS to respective bank Accounts of Crew members. 4. Reimbursement of Travel Cost 4.1 DRS will arrange travel for Officers/Crew for RMS subject to fare approval. 4.2 Travel Agency will raise invoice to RMS C/O DRS. 4.3 DRS will pay to travel agencies for and on behalf of RMS. 4.4 Monthly Reimbursement bill towards travel cost will be raised by DRS to RMS. The applicant has raised following query:- Qs. No. Questions raised by the applicant Submission as per ACT RULE B Whether GST liability is applicable only/ purely on DRS Marine Commission and not on Salary amount which we are supposed to receive in DRS-SFC A/C for disbursal? Rule 33. Value of supply of services in case of pure agent.- Notwithstanding anything contained in the provisions of this Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having with RMS in respect of recruitment services and salary transfer services or contract of any other nature as applicable. Jurisdictional Officer, Ms. R. S. lyer, State Tax Officer appeared and stated they have made written submissions. The application was admitted and called for final hearing on 01.08.2018. Sh. Mukund Pol, C.A. along with Sh. R. S. Bajwa, Director appeared and made oral and written submissions. Jurisdictional Officer, Sh. Avinash Shinde, Dy. Commr of SGST appeared and made written submissions. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant and the department. The applicant is a Crew Recruitment and Placement Agency, and are involved in selecting and recruiting shipping personnel on behalf of their principal/ client who is a Foreign Ship Owner and for which they are charging Administration fees and paying GST on such Administration charges so received. The applicant has submitted that their principal has requested them for disbursal Of salary to the crew members from the applicant s side, for which the principal would be transferring the sum of total salary to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C as a single remittance, and DRS will instruct the bank to disburse the Crew Salary as per list provided by RMS to respective Bank Accounts of Crew Members. At point 2.5 of the said addendum it is mentioned that a fix fees of LIS$ 1250.00 per month will be charged as service charges towards disbursement of salaries inclusive of GST applicable From a reading of points 2.5 and 3 of the Addendum #5 submitted by the applicant it is clear that the Salary of Crews of RMS will be deposited in the account of the applicant in one go and the same will be transferred from the applicant s account directly to the bank accounts of the Crews, by the bank, on the directions of the applicant. Here we find that the entire amount received by the applicant from RMS towards salary of crews is disbursed as such. Hence with respect to this transaction it is crystal clear that the applicant is acting as a pure agent of RMS. Here is to reiterate that the amounts that are to be transferred to this account have to be genuinely in respect of salary of crew as discussed and no other amounts which are not authorized and due as salary can be handled through this account by the applicant. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
