TMI Blog2019 (7) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent could have been performed separately and independently with each other, the fact that the Respondent is raising a singly consolidated invoice in accordance with Clause 9 of the Service Agreement dated 01.03.2013 as amended on 05 January 2017 makes these supplies stipulated under this Agreement as mixed supply in terms of the provision of Section 2(74) of the CGST Act, 2017 - it may verily be inferred that the services performed by the Respondent in terms of the above Service Agreement dated 01.03.2013 as amended on 05.01.2017 is the mixed supply - The service supplied by the Respondent under the Service Agreement dated 1 March 2013 constitutes a mixed supply of services falling under the Heading accounting services having SAC 9982, and under the Heading other professional, technical and business services having the SAC 9983. Whether the service supplied by the Respondent under the Marketing Services Agreement dated 1 December 2012 constitute a supply of Support services falling under HSN code 9985 or Intermediary service classifiable under HSN code 9961/9962? - HELD THAT:- The Respondent is performing a spectrum of services, of which the following services can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAAR/SS-RJ/01/2019-20 - - - Dated:- 19-6-2019 - SMT. SUNGITA SHARMA, AND SHRI RAJIV JALOTA, MEMBER PROCEEDINGS (under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) 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 for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. The present appeal has been filed under Section 100 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 Commissioner, Central Tax, Mumbai East Commissionerate (herein after referred to as the Appellant or the Department interchangeably) against the Advance Ruling No. GST-ARA-35/2018-19/B-108 dated 05.09.2018 = 2019 (1) TMI 1091 - AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA BRIEF FACTS OF THE CASE A. M/s. Asahi Kasei India Pvt. Ltd., The Capital Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other mutually agreed territory) as Party A may from time to time request. In the event Party A should require more detailed information than that so provided by Party B, Party B shall exert its best efforts to obtain such further or more detailed information. 6. At such time and from time to time, as and when representatives of Party A, or its related business circles or customers visit the Territory and Party A so requests, Party B shall provide necessary assistance in business activities (including interpreting) to such representatives. 7. From time to time, as and when requested by Party A, Party B shall make market surveys of the Products in the Territory and report the results thereof to Party A. 8. Party B shall perform services, as directed by Party A, resulting from the assignments pursuant to paragraph 4 through 7 of this Agreement, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. D. As per Clause 9 of the Agreement, Service consideration received by the Respondent is the direct cost+prorated overhead expenses+10% mark-up+applicable taxes. E. It was see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sake of clarity, neither AKI (i.e. the Respondent) nor any of its representatives shall have any authority to conduct negotiations on behalf of the service recipient; f) Connecting Customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commercial relationships between service recipient and customers; g) Providing staff of the service recipient or its customers visiting the territory with such assistance as may be reasonably requested by them, including but not limited to providing information, guide, escort and interpreting services during Customers visits; for the sake of clarity, the premises of AKI will not be the premises of the service recipient and the same shall not be made available to employees or other personnel of service recipient who may visit India; h) Providing information on products and its functioning or similar such services to service recipient s customers and notifying service recipient of any consumer complaints; i) Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de India as defined under Section 2(14) of the IGST Act. c. Condition-III place of supply of Service is outside India. From (a) and(b) above it appears that service provider is located in India and service receiver is located outside India. The services provided by the Respondent is in nature of Support Services classifiable under HSN code 9985. The place of supply in the instant case is determined as per general rule i.e Section 13(2) of IGST Act. The said sub section provides that the location of the recipient of services shall be the place of supply of services. In the present case the place of supply of Service is outside India i.e Asahi Kasei group (Japan). d. Condition IV Payment is received in convertible foreign exchange. The Respondent receives payment in freely convertible foreign exchange i.e. Japanese Yen / United States Dollar. e. Condition V - Supplier of service and recipient of service are not merely establishment of distinct person. Explanation 1 to Section 8 of IGST Act provides that.- For the purposes of this Act, where a person has,- (i) an establishment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the Territory and report the results thereof to Party and Ancillary services to all above services, including, but not limited to, those services with regard to finance, accounting and patent and legal matters would fall under service code tariff 99837 with service description market research services. Question-2: A. The services supplied by the respondent under the Marketing Services Agreement would fall under Group 99837 as Market Research Services. Question-3: Answered in the affirmative in view of the facts of the present case as per discussion held. Now, aggrieved by the above Advance Ruling Order, the Appellant, in this case, the Department has filed an appeal before us on the basis of grounds, detailed herein under: Grounds of Appeal 1. With regard to Question No. 1, there are two possible classifications for the services supplied by the Applicant. The relevant HSN code along with its description is tabulated hereunder: SR.NO. HSN CODE TARIFF ENTRY i. 9961 / 9962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Assisting the service recipient in the adaptation and implementation of its advertising policy; c) Assisting the service recipient in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; d) Liaising with Customers and potential Customers and to collect their product development plans and strategy and road-maps , as well as their product specifications, and reporting the same to the service recipient the information obtained through such interactions; e) Providing any feedback to the service recipient that would help improve the service recipient s marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, neither AKI (i.e. the Applicant) nor any of its representatives shall have any authority to conduct negotiations on behalf of the service recipient; f) Connecting customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commercial relationships between service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract Act, 1872 and section 2(13) of the IGST Act, 2017. 3.4 The complete end to end disclosure of information about the process and the payments on account of various activities mentioned in the Marketing Services Agreement may reveal that the intermediary activity at Clause (f) is actually the principal supply among all the different supplies incorporated in the Marketing Services Agreement. In that situation, the entire set of activities of the applicant will qualify as intermediary services under HSN Code 9961/9962. 3.5 In any case, it may be seen that M/S. Asahi Kasei are procuring different supplies from applicant only for the sole purpose of sale of their goods. Therefore, the supply at clause (f) of the MSA constitutes the principal supply. If the element of sale goods is removed or taken away the entire edifice of supplies by applicant will crumble down. Therefore, the entire composite supply appears to be in nature of intermediary services. 4. It is submitted that the answers to question no. 3 is entirely dependent on the answer to Q. No. 2. If the applicant is an intermediary in terms of Section 13(8)B of the IGST Act, 2017, the supply of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assail the validity of the Order under challenge. On this ground itself, the appeal should be dismissed forthwith. 11. Without prejudice to the above, it is submitted that even on merits, the Respondent does not qualify to be an intermediary. This is for the following two reasons: 12. The Respondent is not an agent/ broker or akin to the same. In this regard, it is submitted that the phrase any other person, by whatever name called should have the characteristics similar to that of an agent/ broker. It is submitted that if the intention of the legislature was to cover persons of all hue and cry under the phrase any other person then words preceding thereto namely broker, an agent becomes redundant as also the words succeeding thereto namely by whatever name called . In such case, intermediary ought to have been simply defined to mean any person who arranges or facilitates the supply of goods or services or both.... but that is not the case in the present, 13. It is submitted that the subsequent words take colour from the preceding terms, i.e., the legal doctrine of ejusdem generis. Hence, for a supplier of services to be treated as an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1417 - CESTAT CHANDIGARH Lubrizol Advanced Materials India Pvt. Ltd, vs CCE, Belapur [2019 (22) GSTL 355 (Tri. - Mumbai)] = 2019 (1) TMI 720 - CESTAT MUMBAI Commissioner of Goods Service Tax, Gurgaon - II vs Orange Business Solutions Pvt. Ltd. [2019-VlL-332-CESTAT-CHD-ST] = 2019 (5) TMI 1351 - CESTAT CHANDIGARH G.E. Power India Limited vs Commissioner of Service Tax [2019-VIL-232-CESTAT-DEL-ST] = 2019 (4) TMI 907 - CESTAT NEW DELHI Godaddy India web Services PM. Ltd. [2016(46) STR 806 (AAR)] = 2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS Additional Submissions filed by the Appellant 17. One round of personal hearing for condonation of delay was held on 14.06.2019, and two hearings on merits of the case were held on 17.06.2019 and 19.06. 2019. Pursuant to the personal hearing conducted on 14.06.2019, the Appellant filed an additional submissions dated 17.06.2019, which are detailed here-in-under: 17.1 The Appellant has quoted the provision of Section 98(2) of the CGST Act 2017, which is reproduced herein under: (2) The Authority may, after examining the application and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. On scrutiny of the Advance Ruling application dated 30.05.2018 in form CGST ARA01, it is found against Sr. No. 13 that the applicant has preferred this application in sub-headings of (i) Classification of any goods or services or both and (ii) determination of the liability to pay tax on any goods or services or both. However, the question No. 3 of the said application is as Whether the services provided by the applicant is an export of service as defined under section 2(6) of the IGST Act 2017? which is not in sync with the provisions and scope of the advance ruling authority as mentioned above (Section 97 of CGST Act). Advance ruling authority does not have jurisdiction to decide the place of supply of service, which is one of the pre-requisites to determine the export of services in terms of section 2(6) of the IGST Act 2017. It is further reiterated that the giving ruling on subject question is out of the purview of the advance ruling authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAC 9985 and Marketing Services having SAC 9983 respectively, and accordingly has held that the service provided by the Respondent is an export of services as defined under Section 2(6) of the Integrated Goods and Service Tax Act 2017. 22. On the perusal of the facts of the case, the records placed before us and various submissions including the additional submissions made by the Appellant on 17.06.2019, we are of the opinion that before going into the merits of the case, we need to examine the maintainability of the Application dated 08.06.2018 filed by the Respondent before the Advance Ruling Authority, in light of the additional submissions filed by the Appellant, wherein they have pointed out that the Respondent itself has attached the letter issued from DGGI, MZU, Mumbai dated 23.01.2018 as Annexure-K to the said application, thereby alleging that there is a pending proceeding against the applicant in DGGI, Mumbai Zonal Unit and hence the above said application filed by the Respondent before the Advance Ruling Authority is not maintainable, as the filing the Advance Ruling Application before the Advance Ruling Authority is contrary to the provisions of the Section 98( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable. 25. Thus, we conclude that the additional submissions filed by the Appellant i.e. the Jurisdictional Officer is not sustainable and therefore we do not find any reason to disagree with the Advance Ruling Authority, which has admitted the application filed by the Respondent on 08.06.2018. 26. Having decided upon the maintainability of the Advance Ruling application, we move on to the merits of the case, wherein the core issue before us is to decide the classification of the supply of services by the Respondent to its parent company i.e. Asahi Kasei Japan in the context of the two Agreements i.e. one Service Agreement dated 01.03.2013 as amended on 05.01.2017, and another Marketing Services Agreement dated 01.12.2012 . 27. After going through the facts of the case and the submissions made in respect thereto, it is observed that the Respondent have been supplying a gamut of services in integrated manner to its parent company under each of the above said two agreements i.e. (i) Service Agreement with Asahi Japan [dated 01 March 2013] as amended on 05 January 2017 and (ii) Marketing Services Agreement with Bioprocess Division of Asahi Kasei Medical Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd its parent company, it is observed that the Respondent is obliged to perform services which are enumerated herein under: a) Conducting market surveys and providing the service recipient with the information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential; b) Assisting the service recipient in the adaptation and implementation of its advertising policy, c) Assisting the service recipient in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; d) Liaising with Customers and potential Customers and to collect their product development plans and strategy and road-maps , as well as their product specifications, and reporting the same to the service recipient the information obtained through such interactions; e) Providing any feedback to the service recipient that would help improve the service recipient s marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , exhibitions, trade shows and the like; iii) Providing any feedback to the service recipient that would help improve the service recipient s marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, neither AKI (i.e. the Respondent) nor any of its representatives shall have any authority to conduct negotiations on behalf of the service recipient; iv) Providing staff of the service recipient or its customers visiting the territory with such assistance as may be reasonably requested by them, including but not limited to providing information, guide, escort and interpreting services during Customers visits; for the sake of clarity, the premises of AKI will not be the premises of the service recipient and the same shall not be made available to employees or other personnel of service recipient who may visit India, v) Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting the same to the service recipient; and vi) Any other assistance in the contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reporting these information to its parent company, by connecting Customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commercial relationships between service recipient and customers, and by providing information on products and its functioning or similar such services to service recipient s customers and notifying service recipient of any consumer complaints. Thus, it can conclusively be deduced that the Respondent is playing a very significant role in this supply chain of the Products manufactured and distributed by its parent company to its distributors located in India. Some of the activities e.g. collecting the product development plans and strategy and road-maps , as well as the product specifications from the customer of its parent company , providing information on products and its functioning or similar such services to service recipient s customers, are undertaken by the Respondent on behalf of its parent company, thereby, fulfilling the criteria of the Agent as defined under Section 2(5) of the CGST Act, 2017, which is being reproduced herewith for ease of reference: (5) agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Other professional, technical and business services bearing SAC 9983, and under the Heading other miscellaneous services bearing SAC 9997, can be supplied separately and independently, as there is no intrinsic relationship between these services, thus rendering the entire gamut of supply as mixed supply and not the composite supply as these services are not naturally bundled. 41. As regards the question (3) of the application filed before the Advance Ruling Authority, wherein it was asked from the Advance Ruling Authority as to whether the service provided by the Respondent is an export of services as defined under Section 2(6) of the Integrated Goods and Service Tax Act 2017, it is observed that whereas the determination of the place of supply of services is one of the prerequisites for determining any supply of services to be export of services, determining the place of supply of services or goods is not in the jurisdiction of the Advance Ruling Authority as is clearly evident from Section 97(2) of the CGST Act, 2017, which prescribes the set of 7 questions in respect of which Advance Ruling can be sought under the provision of the CGST Act, 2017 and the said 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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