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TMI Blog2021 (11) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... part of a multi-national group and is a subsidiary of Workplace Options LLC. 3. Workplace Options LLC entered into a global arrangement with Beacon Health Options Inc.-US (previously known as Value Options Inc. - US), which is a company established in USA and does not have any office or fixed establishment in India, in November 2009 for the purpose of mutual referral of clients and work agreements to Workplace Option group companies across the globe. Beacon US, as part of the global arrangement, has entered into arrangement, for the Indian market involving Workplace Option India Pvt. Ltd., the Applicant and referred a customer M/s FIS Global Solutions India Pvt. Ltd., ('FIS India') to the applicant for performing employee assistant services, for which the Beacon US charges referral fee to the applicant, by raising an invoice directly to the applicant, equal to certain percentage of the price charged by the applicant to FIS India, as agreed by both the applicant and Beacon US. 4. In view of the above, the applicant has sought advance ruling in respect of the following questions: a. Whether the services procured by the applicant from Beacon US in respect of the referral of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement with Beacon US and FIS India which are worthwhile noting for the purpose of examining the scope of the definition of intermediary services is as follows: a. Beacon has the relationship with the end client FIS Global/ India and responsible for obtaining this client for Workplace Options b. Beacon has arranged the finalization of the agreements between Workplace India and FIS India and Workplace has disclosed this agreement with FIS to Beacon US since the referral fee is calculated based on the billings made by Workplace India to FIS India. The FIS agreement is attached as Exhibit I to the agreement between Workplace India to Beacon US. c. The right to claim referral fee arose to Beacon only after the client is finalized, the service is rendered and the billings are made by Workplace India to the client. d. Beacon is arranging or facilitating the employee assistance services by Workplace India to FIS India and has been instrumental in procuring the contract for Workplace India. It is a fact that the FIS would not have become the client of Workplace India if Beacon has not mediated this arrangement. e. Payments to Beacon would be made by Workplace India in foreign exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the said activity. Section 8 is also applicable only where services are rendered within India and not applicable to services rendered from outside India. We are therefore left to only examine Section 7(4) of the IGST Act which states that services imported into the territory of India shall be treated to be a supply of service in the course of inter-state trade or commerce. Consequently, the taxability of the said activity would have examined under the IGST law and not under the CGST/ SGST Act. 6.6 For examination of the taxability under IGST Act, Article 286 of the Constitution is relevant: "Restrictions as to imposition of tax on the sale or purchase of goods. 286. (1) No law of a State shall impose, or authorise the imposition of a tax on the supply of goods or of services or both, where such supply takes place- (a) outside the State; or (b) in the course of the import of the goods or services or both into, or export of the goods or services or both out of the territory of India. (2) Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1)." 6.7 Section 1 of the IGST Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acon US being the service provider can be considered 'intermediary'. The pre-conditions of satisfying this condition in the context of the said arrangement are as follows: a. Whether Beacon can be termed to be a broker, agent or any other person who arranges or facilities the supply of goods or services or both between two or more persons? b. Whether exclusion of the person who supplies goods or services on his own account would be applicable here? 6.13 The applicant is of the view that the said referral activity by Beacon to Workplace is an intermediary activity wherein Beacon would fall within the definition of intermediary in terms of 2 (13) of the IGST Act. Beacon is an intermediary on account of the following reasons: a. Beacon has arranged the employee assistance services between Workplace 'Place India and FIS India b. Beacon had identified FIS group globally for Workplace Group and interacted with FIS group for the proposal of providing employee assistance services. FIS group agreed to procure the said services from Workplace Place on the basis of the recommendation and/ or referral work by Beacon US. Until Beacon introduced FIS group to Workplace, Workplace would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n service", but provides the main service on his own account. In order to determine whether a person is acting as an intermediary or not, the following factors need to be considered:- Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary's service is invariably identifiable from the main supply of service that he is arranging. It can be based on agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as "commission". Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable. In accordance with the above guiding principles, services provided by the following persons will qualify as 'intermediary services':- i) Travel Agent (any mode of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the services procured from Beacon US as an intermediary service provider. PERSONAL HEARING PROCEEDINGS HELD ON 08.09.2021 7. Sri Rishabh Singhvi, Chartered Accountant & Authorised Representative of the applicant appeared for personal hearing proceedings held on 08.09.2021 and reiterated the facts narrated in their application. FINDINGS & DISCUSSION 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing. 10. The applicant herein is a subsidiary of M/s Workplace Options LLC (US ..... X X X X Extracts X X X X X X X X Extracts X X X X
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