TMI Blog2019 (10) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... es are concerned. The applicant is also of the same view that it would qualify as intermediary - Further, this supply of marketing and pre-sale technical support services is in the nature of selecting a customer, analyzing the requirements of the customers, showcasing the product, convincing of the features of the product which would meet the requirements of the customers, finalization of the product that is required by the customer, and after the order is placed on the overseas parent company, following it with the finalization of documentation and collection of invoice value - all amounts to the provision of Distributive trade services under Heading 996111, the description of which is Services provided for a fee or commission or on contract basis on wholesale trade . This is clear from the reason that the consideration for the above service is fixed as a percentage of the Sales Order Value of the respective customer. Classification of Post-Sales Technical Support Services - HELD THAT:- The nature of transaction is providing the persons who have purchased Ansys Software and using it, 24*7 customer support either through e-mail or through telephone or through Web-Support. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation Technology Support Services falling under HSN Code 998313? The applicant states that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions, and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the KGST Act. For the purposes of this application, a reference to such a similar provision under the CGST Act and / or KGST Act would be referred to as being under the GST Law . 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is a private limited company with its registered office situated at Plot No.34/1. Rajiv Gandhi Infotech Park, MIDC, Hinjewadi, Pune - 411057, Maharashtra. ANSYS India is a wholly owned subsidiary of M/s. ANSYS Inc., US (hereinafter referred to as Ansys US or the Parent Company ). The Parent Company has subsidiaries in various parts of the globe. (Ansys US referred hereafter may be construed to include such subsidiary companies of ANSYS Inc. as well). ANSYS India has business premises across India including in Bangalore in Karnataka, Noida in Ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Pre-Sales Technical Support Services, in both the above cases, Ansys India undertakes the following functions: (a) Ansys India understands the customer s requirements and through discussions, presentations, demonstrations, benchmarks, and evaluations, Ansys India showcases solutions using Ansys Software to the customer. This helps the customer to understand the functionality of Ansys Software, how it is relevant for their needs in terms of automated solutions, reduced response and turnaround time and cost savings in developing a new product and thereby helps the customer in decision making process; (b) Ansys India also explores new business opportunities with existing customers by conducting best practice sessions, technology days and discussions with the customers; (c) Once the order is placed by the customer on Ansys US, Ansys India also co-ordinates with the customer and Ansys US for signing of software licence agreement and other related documentation. (d) Ansys India also helps in follow up for collection of invoice value from the customer. However, it is important to note that the collection risk rests with Ansys US only; Thus, in both cases of direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical query by resorting to web support. Under Web-Support, the customer support team schedules a Webex meeting (interactive audiovisual computer based meeting) to better understand the customer s technical query or to better explain the resolution methodology to the customer. During the Webex meeting, the customer may share computer screen with the Ansys Technical Support team for effective resolution of their technical query. The customer is entitled to TECS for a specified period and it is the responsibility of Ansys US to support the customer for any troubleshooting or technical support that he may need in using Ansys Software. For providing this customer support, Ansys US has engaged Ansys India. It is pertinent to note here that, there is privity of contract between Ansys India and Ansys US and not between Ansys India and customers of Ansys US. Thus, even though the customers of Ansys US are users of Post-Sales Technical Support Services, they are not recipients of such services. Recipient in the present case is Ansys US in respect of Post-Sales Technical Support Services provided by Ansys India. To further corroborate this point, the applicant submits that, Ansys In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the respective customer where Ansys India provided Post Sales Technical Support Services or will be on a basis or mechanism which may be mutually agreed. Accordingly, Ansys India would be remunerated separately by Ansys US for each of the above referred activities distinctly. In this context, the applicant states that it is important to note that the agreements will be mutually exclusive and it is not necessary that post-sales technical support will necessarily flow as a result of Marketing and Pre-Sales Technical Support. 6. Regarding the legal issues in relation to Marketing and Pre-Sales technical support services, in order to classify the said services, the applicant refers to the definition of Intermediary which has been defined under Section 2(13) of the IGST Act, 2017 as under: 13. 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. The applicant states that on bare reading of the above definition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nger in the sale of Ansys Software by Ansys US to Indian customers. 6.4 Having regard to the above, the applicant is of the view that they would be regarded as intermediary in terms of Section 2(13) of the IGST Act, 2017, as regards provision of Marketing and Pre-Sales Technical Support Services. 6.5 Having regard to the above, the applicant is of the view that HSN Code applicable for Pre-Sales Technical Support Services, in the capacity of intermediary, under Notification No.11/2017 (Rate) dated 28th June, 2017, would be as per the table below: Section No. Description 6 Distributive Trade Services; Accommodation, Food and Beverage Service; Transport Services; Gas and Electricity Distribution Services Heading No. Description 9961 Services in wholesale trade 99611 Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate wholesale commercial transactions between buyers and sellers, for a fee or commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the GST Law and detailed annexure thereto, the applicant is of view that Post Sales Technical Support Services would be classified as under. Section No. Description 8 Business and Production Services Heading No. Description 9983 ii Other Professional technical and business services Group No. Description 99831 Management Consulting and management services; information technology services HSN Description 998313 Information Technology (IT) Consulting and Support Services 7.3.2. The applicant refers to the Explanatory Notes to the Scheme of Classification of Services issued on 12 th June 2018, by the Central Board of Indirect Taxes and Customs, wherein it is specified that: 3. The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce from explanatory notes issued by CBIC and not by reference to the manner of calculating consideration payable for the same. 8.1 In this regard, the applicant places reliance on the decision of Hon ble CESTAT, Bangalore in the case of GE India Technology Center Pvt. Ltd [2014 (36) STR 1109 (Tri-Bang)] = 2014 (7) TMI 708 - CESTAT BANGALORE in which the Hon ble Tribunal observed that the method by which consideration is determined cannot be the basis of classification of service. The basis has to be the fact that the service provided should fit into the definition of service under which it is supposed to be categorized. Though this decision has been rendered in the context of Service Tax Law, the ratio of this decision still holds good even under GST Law. Thus, in the applicant s case, even though the consideration is payable as a percentage of order value or it may be as per the basis or mechanism which may be mutually decided, the applicant is of the view that the classification is Post-Sales Technical Support Services would remain the same, i.e. Information Technology (IT) Consulting and Support Services (HSC 998313). PERSONAL HEARING / PROCEEDINGS HELD ON 31.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the relevant software. Performing the necessary work would amount to amount to facilitation of the supply, And as the applicant is facilitating the supply of goods or services or both by the parent company to other persons, and is not making the supply in its own account, he would be covered under the definition of an intermediary under the clause (13) of section 2 of the Integrated Goods and Services Tax Act, 2017 as far as the supply of marketing and pre-sales technical support services are concerned. The applicant is also of the same view that it would qualify as intermediary . 10.5 Further, this supply of marketing and pre-sale technical support services is in the nature of selecting a customer, analyzing the requirements of the customers, showcasing the product, convincing of the features of the product which would meet the requirements of the customers, finalization of the product that is required by the customer, and after the order is placed on the overseas parent company, following it with the finalization of documentation and collection of invoice value - all amounts to the provision of Distributive trade services under Heading 996111, the description of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the applicant for the services rendered to the end-customers by the applicant on behalf of the parent company. 11.2 The applicant has also stated at the time of hearing, the Ansys software which is supplied is an off the shelf software and is not designed specifically for each customer. The post-sale technical support service is in relation to the software supplied by the parent company and the service supplied is troubleshooting and technical support services provided to the end-customers on behalf of parent company. The parent company would be the recipient of services as per clause (91) of section 2 of the Central Goods and Services Tax Act and the applicant would be the supplier of services. 11.3 Since the services provided is in providing support to the software supplied earlier, the same amounts to provision of information technology services which is covered under Heading 9983 - Other professional, technical and business services and Group 99831 - Management Consulting and Management Services; Information Technology Services and Service Code 998313 - Information Technology consulting and support services. The explanatory note to the scheme of classification of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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