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TMI Blog2019 (9) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. 3. BRIEF FACTS OF THE CASE: 1. M/s. Director of Skills Development Department of Technical Education Skill Development and Employment Govt of Madhya Pradesh (hereinafter referred to as "the Applicant"), having their registered office at Global Skill Park ITI Building Raisen Road Govindpura Bhopal Madhya Pradesh is unregistered in GST. 2. The project for the Establishment of Centre for Occupational Skills Acquisition within the Global Skills Park (herein after referred as GSP) in Bhopal, Madhya Pradesh was awarded to Directorate of Skill Development, Department of Technical Education, Skill Development & Employment, Government of Madhya Pradesh. 3. The said Project will assist the Government of Madhya Pradesh (GOMP) in transforming its technical and vocational education and training (TVET) system to create a skilled workforce that meets the evolving development needs of the state. 4. The project will establish a new advanced TVET Institute of international standards to introduce high quality, technology oriented skills training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Equipment's. c. State of art classrooms, workshops and other facilities for students. d. Partnership with Institute of Technical Education Singapore for course curriculum and teacher training. 14. Global Skills Park (GSP), is a new-age world class technical training institution for providing career cluster curriculum skilling courses and opportunities of overseas employment, is getting established in Bhopal, Madhya Pradesh, India. 15. GSP will provide world-class technical training in precision engineering sector with six career oriented trades namely Conventional Lathe, Conventional Milling, CNC Milling, CNC Turning, Surface Grinding and Machining and Metrology with soft skills add on courses like IT Skills and Communication Skills. 16. As the state of Madhya Pradesh is developing state of India and mainly dependent of agricultural activities hence government wants to stimulate the industrial growth in the state of MP. To promote this objective skilled manpower is the need of the hour keeping this objective in mind the Global skill Park is being established. There is no commercial or business motive behind establishment of this GSP hence the activity being performed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of Madhya Pradesh ("Client") and ITE Education Services Pte. Ltd, a Singapore based Consultancy Company. 6.7 The Project is to be executed by the ITE Education Services Pte. Ltd, Singapore between Nov 2018 to May 2023 the total consideration has been decided to be USD $ 38,12,740/-. Which is to be paid in 11 instalments. 6.8 In this regard we would like to reproduce here the Clause 38.1 of the Agreement describing the consideration agreed between the parties: - The Contract price is US $ 3,812,740 (inclusive of Consultant country taxes). The lump sum amount is exclusive of provisional sums and contingency, which will be covered separately under the project, if required. The lump sum amount is exclusive of all Indian taxes, levies and duties imposed by the Applicable Law. If the Applicable Law requires any Indian taxes, levies or duties to be paid, the Consultant shall be entitled to invoice the Client for a higher amount such that, after the payment/withholding of the relevant Indian taxes, levies or duties, the Consultant shall receive the original amounts state in Appendix C. 6.9 The ITE Education Services Pte. Ltd, Singapore shall raise invoices as per the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person liable for paying the tax in relation to the supply of such goods or services or both. Extract from Notification No. 10/2017 Integrated Tax (Rate) dated 28th June 2017 Table SI. No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 1 Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. Any person located in a non-taxable territory Any person located in the taxable territory other than non-taxable online recipient 6.14 Extracts of Notification No 9/2017 dated 28 June 2017, exempts certain services received from a provider of service located in a non taxable territory by the State Government in relation to any purpose other than commerce, industry or any other business or profession; Chapter 99 Services received from a provider of service located in a non- taxable territory by - (a) the Central Government, State Government, Union territory, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession; (b) an entity registered under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I made or agreed to be made without a consideration; So there are 2 important elements to categorise any transaction as a supply i.e. -- Consideration and -- in the course or furtherance of business. 7.2 According to Section 2(17) of CGST Act "business" includes- (a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) Any activity or transaction in connection with or incidental or ancillary to sub-clause (a): (c) Any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) Supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) Provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/2017 - IT (R)]. 7.4 Applicability of Reverse Charge under IGST for Import of Services The applicant desired to know, whether the services received by it from a provider of service located in a non-taxable territory would attract the provision of sec 5(3) read along with Notification No 10/2017 IT(R). In other words, whether applicant is liable to pay tax under reverse charge mechanism on the transaction mentioned above? According to Section 5(3) of IGST Act, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. 7.5 Applicability of Reverse Charge on Import of Services Relevant Extract of Notification No 10/2017 - Integrated Tax (Rate) are produced as under - S.No Category of Supply of Services Supplier of service Recipient of service 1 Any service supplied by any person who is located in a non-taxable territory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from a provider of service located outside India be taxable? Answer: No tax is payable on the services received by the Government / local authority/governmental authority from a provider of service located outside India. However, the exemption is applicable to only those services which are received for the purpose other than commerce, industry or any other business or profession. In other words, if the Government receives such services for the purpose of business or commerce, then tax would apply on the same. 7.10 As analysed above in para no 7.1 and then 7.2 that applicant is engaged in activities which is to be treated as Business or profession as defined in the Section 2(17) of CGST Act. Further applicant is taking the service from non taxable territory for the purpose of business or profession therefore exemption provided in the Notification No.9/2017-lntegrated Tax (Rate) dated June 28, 2017 would not be available to the applicant. Therefore the applicant needs to pay the IGST under Reverse Charge. 8. RULING (Under section 98 of Central Goods and Services Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017) 8.1. The Applicant shall be liable to pay IGS ..... X X X X Extracts X X X X X X X X Extracts X X X X
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