TMI Blog2019 (11) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... AAR that the said supply of the Appellant will be treated as an Intra - State supply in accordance with the provision of Section 8(2) of the IGST Act, 2017. The AAR, while answering the second question asked by the Appellant, wherein the Appellant had asked whether the supply made by them will be a zero rated supply i.e. export within the meaning of Section 2(23) read with Section 2 (6) of the IGST Act, 2017, held that the supply of the Appellant will not qualify as export of service, as the two of the 5 conditions prescribed for the export of a services, as laid out in Section 2(6) of the IGST Act, 2017, are not being satisfied by the Appellant in as much as (i) the place of the supply of the service is not outside India and also, (ii) the supplier of service and the recipient of service are merely establishments of a distinct person in accordance with explanation 1 in section 8 of IGST Act. Whether we have jurisdiction to decide the nature of the levy i.e. CGST and SGST or IGST, to be imposed on any supply of goods or services or both or not? - HELD THAT:- The question on determination of the place of supply has not been covered in the set of questions, on which the advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at are photographed with R2Net s proprietary Diamond Display Technology. Customer agrees to send its diamonds and/or gemstones to be photographed in R2Net s photography centers on a regular basis. F. R2Net has appointed Segoma Israel for photography service. Inturn, Segoma Israel has made agreement with Segoma India to do photography service. G. Segoma Imaging Technologies has developed a method of providing potential buyer(s) with what could be simplified as a 3D model of the valuable stones jewellery made available for the purchase thereof. The uniqueness of Segoma s technology is the ability to capture and display 3D real-life images of diamonds and gemstones to the extent that through these interactive images, an observer can identify their colour, clarity and cut. This grants buyers the confidence to rely on these images and make the right choice when deciding whether to make a purchase. H. Customers of R2Net give diamond on returnable basis to Segoma India. Segoma Israel does not have role in receiving diamond. Segoma India issues memo of receipt of diamonds to customers of R2Net. Segoma India takes photos of diamonds and upload photos of diamond on softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Diamond dealers / Traders who are not recipient of service, it does not satisfy condition as mentioned in Sec 13 (3) (a), further the export condition no: (ii) Segoma Israel is recipient of service, has been accepted by the learned AAR. 4. Definition of Recipient of Service as per Sec 2 (93) of CGST: (93) recipient of supply of goods or services or both means - (a) Where a consideration is payable for the supply of goods or services or both, the person who is liable to pay the consideration; (b) .......................... (c) .......................... 5. Since there is a Consideration flow in the transaction i.e. payment is made by Segoma Israel in Foreign currency to Segoma Imaging India, the recipient of service cannot be other than Segoma Israel. 6. Further the benefits of the services have accrued to Segoma Israel which could upload and condition the photographs taken by Segoma India. A Service is not necessarily, a single, discrete, identifiable activity; on the contrary, it is a series of invisibles that caters to the needs of a recipient; it is upon the consumption of the service by the recipient that service is deemed to have bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; .............................. 12. In the above context, The Learned Authority has stated that recipient of the service who wants to avail services has to make goods physically available on direct or indirect directions to the service provider and it does not matter who owned the goods. 13. The Learned Authority are of the view that the goods physically required for rendering services can be provided by any other person other than the recipient of the service, as it envisages that it is sufficient for the recipient of service to make them physically available to the service provider for rendering the services even if the service receiver is not in control of the said goods or not in any physical possession. 14. Therefore, let us first understand the Rules of Interpretation from the above context: Interpretation of Statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give none. The process of construction combines both the literal and purposive approaches. The purposive construction rule highlights that you should shift from literal construction when it leads to absurdity. 19. In construing Statutes, the cardinal rule is to construe its provisions Literally and grammatically giving the words their ordinary and natural meaning. This rule is also known as the Plain meaning rule. The first and foremost step in the course of interpretation is to examine the language and the literal meaning of the statute. The words in an enactment have their own natural effect and the construction of an act depends on its wording. There should be no additions or substitution of words in the construction of statutes and in its interpretation. The primary rule is to interpret words as they are. It should be taken into note that the rule can be applied only when the meanings of the words are clear i.e. words should be simple so that the language is plain and only one meaning can be derived out of the statute. 20. In Municipal board v State transport authority, Rajasthan = 1962 (11) TMI 66 - SUPREME COURT , the location of a bus stand was chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thing in a legal context might mean something else if it were in a technical manual or a novel. So, the plain meaning of a legal text is something like the meaning that would be understood by competent speakers of the natural language in which the text was written who are within the intended readership of the text and who understand that the text is a legal text of a certain type. (Prof. Larry Solum s Legal Theory Lexicon). 22. A literal construction would not be denied only because the consequences to comply with the same may lead to a penalty. The courts should not be over zealous in searching for ambiguities or obscurities in words which are plain. ( Tata Consultancy Services V. State of A.P. (2005) 1 SCC 308) = 2004 (11) TMI 11 - SUPREME COURT . Understanding the literal rule: The literal rule may be understood subject to the following conditions - i. Statute may itself provide a special meaning for a term, which is usually to be found in the interpretation section. ii. Technical words are given ordinary technical meaning if the statute has not specified any other. iii. Words will not be inserted by implication. iv. Words undergo shifts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the natural and ordinary meaning of that word or phrase in its context in the statute but when that natural or ordinary meaning indicates such result which cannot be opposed to have been the intention of the legislature, then to look for other meaning of the word or phrase which may then convey the true intention of the legislature. In the case of Suthendran V. Immigration Appeal Tribunal, the question related to Section 14(1) of the Immigration Act, 1971, which provides that a person who has a limited leave under this Act to enter or remain in the United Kingdom may appeal to an adjudication against any variation of the leave or against any refusal to vary it. The word a person who has a limited leave were construed as person should not be included who has had such limited leave and it was held that the section applied only to a person who at the time of lodging of his complaint was lawfully in the United Kingdom, in whose case, leave had not expired at the time of lodgment of an appeal. Another important point regarding the rule of literal construction is that exact meaning is preferred to lose meaning in an Act of Parliament. In the case of Pritipal Singh V. Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. In simple words, read the law as it is written without adding or deleting any words written in Law. This rule will not be applicable in following circumstances: i. If Language is Ambiguous i.e. two interpretations is possible. ii. If the literal interpretation defeats the actual intention of legislation. In view of the above discussions, we would like to state that there have been additions or substitution of words direct or indirect directions in the construction of statutes by the Learned AAR Authority. 28. The Learned AAR Authority has since contradicted their own submission where, the language is clear and unambiguous used by legislature then the plain and natural meaning of the words should be supplied to the language used and resort to any rule of interpretation to unfold the intention is permissible only where there is any ambiguity . 29. We humbly submit that, the Learned AAR Authority has inserted the words by implication which is open to interpret the meaning of the sentence by the recipient of service by expanding the service recipient to person other than the recipient itself. 30. Further as per the Definition of Recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered a Branch office or representational office of Segoma Israel as the transactions are made Principal to Principal, and it is this transaction between Segoma India and Segoma Israel that is claimed as a Zero rated export supply and a transaction between distinct persons as per the IGST Act. Case laws: 34. Tandus Flooring India Pvt Ltd. Ruling No. AAR/ ST/ 03/2013 dated 26-8-2013. 2014 (33) S.T.R. 33 (A.A.R.) = 2013 (8) TMI 806 - AUTHORITY FOR ADVANCE RULINGS The services provided out of the taxable territory are not taxable in India in terms of section 66B of the Finance Act, 1994. However, the same are treated as export only if satisfy conditions laid down under Rule 6A of Service Tax Rules, 1994. One of the conditions of Rule 6A provides that if the services are provided by an establishment of a person in the taxable territory to another establishment of the same person in the nontaxable territory, such transaction will not qualify as exports (clause (f)). Consequently, even though such transactions may not be taxable in India, may not be entitled to export linked reliefs. In the given case, the applicant was a wholly owned subsidiary in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Determination of time and value of the goods or service or both; (d) Admissibility of 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 the applicant is required to be registered under GST; (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. From the above, the GST Act 97 (2) Limits AAR to decide issues earmarked for it which does not cover the examination of Place of Supply, since AAR is constituted under the respective State/ UT and not Central Act. 37. Utility Powertech Ltd. In re (AAR Chhattisgarh)... = 2018 (7) TMI 882 - AUTHORITY FOR ADVANCE RULINGS, CHHATTISGARH This would mean that the ruling given by the AAR will be applicable only within the Jurisdiction of the Concerned state in our case it is Maharashtra State GST, it is for this reason that question on determination of Place of supply cannot be addressed by AAR and hence applicability of Place of supply cannot be taken by AAR for lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the supplier and the place of supply of services are in the same state or same Union Territory shall be treated as intra-State Supply: 40. In view of the findings, the AAR, while answering the second question asked by the Appellant, wherein the Appellant had asked whether the supply made by them will be a zero rated supply i.e. export within the meaning of Section 2(23) read with Section 2 (6) of the IGST Act, 2017, held that the supply of the Appellant will not qualify as export of service, as the two of the 5 conditions prescribed for the export of a services, as laid out in Section 2(6) of the IGST Act, 2017, are not being satisfied by the Appellant in as much as (i) the place of the supply of the service is not outside India and also, (ii) the supplier of service and the recipient of service are merely establishments of a distinct person in accordance with explanation 1 in section 8 of IGST Act. 41. On perusal of the above facts and circumstances of the case, the moot issue, before us, is whether we have jurisdiction to decide the nature of the levy i.e. CGST and SGST or IGST, to be imposed on any supply of goods or services or both or not. Because the first ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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