TMI Blog2022 (4) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... If the incentives received by them are not considered as Trade Discount then whether it is consideration for any supply? - HELD THAT:- It is seen that IIUL has appointed various distributors to sell the company's products in India and the applicant is not a distributor. If the distributors had given Trade Discounts to the applicant, maybe such a case could have been covered under Section 15 (3) of the GST Act, 2017. There is no such discount or incentive received by the applicant from the distributors from whom the impugned goods are being purchased for further sale down the line. The only reason for the applicant to receive incentives in the subject case appears to be for increasing the business of IIUL and therefore there appears to be a supply of services in the subject case since there is no supply of goods at all between the applicant and IIUL. Since some amount, in the form of incentives, is flowing from IIUL to the applicant, in the absence of supply of goods between the concerned persons it appears that IIUL is paying consideration (in the form of incentives) to the applicant for receiving marketing services which would augment the sale of Intel products in the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct from Intel inside US LLC and the Applicant purchases the products from the said Distributors and further sells the same product to various retailers. 2.3 That they have entered into agreement with Intel inside US LLC under Intel Authorized Components Supplier Program (IACSP) and thereby will receive a non-binding Plan of Record Target (POR Target) under which, Applicant will earn certain incentive as percentage of performance to quarterly goal on eligible Intel products. 2.4 That as per agreement they receive Incentives on completion of targets set under said agreement in Intel Authorized Components Supplier Program (IACSP). 2.5 That Incentive received from Intel Inside US LLC under Intel Approved Component Supplier Program (IACSP) is considered as Trade Discount as per the provisions of Section 15(3) of the CGST Act, 2017. 2.6 The Applicant relies on decision of Hon'ble Mumbai Tribunal in the case of Sharp Motors v. Commissioner of Service Tax 2016(43) S.T.R. 158 (Tri. Mumbai) where issue was whether incentives received on achieving the sales target would be subjected to service tax or not as o business auxiliary service and The Tribunal observed that T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec 2{6) of IGST Act. 2.9.3 In the present case the supplier of services (applicant) is located in India and recipient who is Intel inside US LLC is located outside India. As per Section 13 (2) of the IGST Act, 2017, the place of supply is the location of recipient of service and since Intel inside US LLC is located outside India the place of supply shall be outside India. Further, Incentive received is in convertible foreign exchange. Therefore, all the condition of export of service is satisfied in present transaction. Once it is an export of service the said service will be qualify as Zero rated Supplies. Therefore, the said supply will not be liable for GST. 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional officer has not made any written submissions in the matter. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 07.12.2021. The Authorized representative of the applicant, Shri. Rahul Thakkar, Advocate was present and made submissions pertaining to admission of the application. The Jurisdictional officer was absent. Applicant was requested to produce relevant records, correspondence, agreements or other proof in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) Input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. 5.5.2 From the submissions we find that the applicant purchases the goods from the distributors and is not receiving discounts from the said distributors. Therefore, there is no supply of goods or services or both from IIUL to the applicant, no sale transaction of goods in the instant case between the applicant and IIUL and hence, the 'incentives' received by the applicant from IIUL will not be covered under the provision of Section 15 (3) mentioned above. There is no way that the said 'incentives' can be treated as Trade Discount given by IIUL to the applicant because the supply of goods in respect of which the incentives are purported to be given are rendered by the distributors and not by IIUL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST Act which defines the term 'Export of Services as under :- 2(6) export of services means the supply of any service when,- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; 5.7.3 From the submissions of the applicant we observe that clauses (i), (ii), (iv) and (v) are satisfied in the instant case. What is required to be seen is whether the place of service for the Incentives received, is outside India. We therefore refer to Section 13 of the IGST Act, 2017, which is reproduced as under:- 13. (1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. (2) The place of supply of services except the services specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service. 5.7.4 As per Section 13 (2), the place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services. Section 13 (3) (a) provides that the place of supply of the following services shall be the location where the services are actually performed, namely:- (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services. 5.7.5 In the instant case, the marketing services are provided in respect of goods which are made physically available by the recipient of services (i.e IIUL, through its distributors) to the supplier of marketing services (i.e. the applicant), in order to provide the services. Therefore, as per Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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