TMI Blog2022 (6) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. Thus, it can be concluded that the bunch of activities undertaken by the Appellant is nothing but the mixed supply as provided under Section 2(74) of the CGST Act, 2017. On perusal of the activities of the Appellant, it is conspicuous that the Appellant, inter-alia, are organizing various seminars, conferences, other interactive events for Indian Business entities and Dubai Business entities/ delegates for the better understanding of the business landscapes in India and Dubai, and for promoting and projecting Dubai as an international business hub as a part of the diplomatic mission of their Dubai Head Office. Thus, such activities of the Appellant can be grouped under the category of support services having the Service Accounting Code 998596 which has the description as Events, exhibitions, conventions and trade shows organization and assistance services - it is opined that the Appellant are providing support services to their Dubai Head Office, which attracts GST at the rate of 18% in terms of item (iii) of the entry at SI.No. 23 of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017, having the description Support services other than (i) and (ii) above . W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This means that as per the CGST Act, 2017, DCCI-H.O. is a person as it has been incorporated under the laws of a country outside India. Further, from the same definition of person , reproduced above, it is also manifest that every artificial juridical person, not falling within any of the above is also a person. This leads us to conclude that DCCI-L.O., i.e., the Appellant, who is also bound to comply with various statutory obligations in India, viz. filing of Annual Income Tax Returns with the Income Tax Authorities, filing of Annual Financial Statements with the Registrar of the Companies under the Indian Companies laws, etc., can definitely be considered as an artificial juridical person. Thus, it is seen that DCCI-H.O. and DCCI-L.O./Appellant are two different persons as per the GST law, and thereby, the activities undertaken by the Appellant at the behest of their Dubai Head Office will clearly constitute supply in terms of Section 7(1)(a) of the CGST Act. 2017 as all the prerequisites of the supply provided under Section 7(1)(a) of the CGST Act, 2017 are being satisfied by the activities undertaken by the Appellant at the behest of their Dubai Head Office. Thus, the hos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and by supporting the development of businesses. Thus, DCCI is established and governed by the decree/law of Dubai for development of Dubai's businesses at large. 3.3 That DCCI - LO has been set up to play a key role in the growing trade and diplomatic relations between India and the UAE in pursuance to the meetings held between the Heads of the two countries, i.e.. the Hon'ble Prime Minister of India and Hon'ble President of U.A.E. The functions undertaken by the DCCI-LO/Appellant are as follows: a. Liaison between India office and Dubai office - This involves sharing of general information/ knowledge in relation to opportunities in UAE or India for the proposed businesses that includes information pertaining to updates in regulations, policy framework, business trends, potential areas of growth in business, etc. b. Attending and representing DCCI - Dubai H.O. in various seminars, conferences trade fairs / exhibitions- At major events in India, the office promotes the emirate of Dubai to companies intending to grow their international presence. DCCI -LO/Appellant also informs Indian businesses about key exhibitions in Dubai to boost their international b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, which are required for normal functioning of the office on behalf of the Head Office located at Dubai. 3.5 In order to avoid any kind of tax disputes in future and for certainty of position, DCCI LO. i.e., the Appellant, had sought an advance ruling before the MAAR under Section 97 of the Central Goods and Services Tax Act, 2017, on the following questions: a. Whether the activities performed by Appellant shall be treated as supply under GST law? b. Whether the Appellant is required to obtain GST registration? c. Whether the Appellant is required to pay GST. 3.6 The MAAR, vide Advance Ruling Order No. GST-ARA-35/2019-20/B-14 dated 24.05.2021 , held as under: (a) The activities performed by the Appellant would be treated as supply under GST law; (b) The Appellant was required to obtain GST registration; (c) The Appellant was liable to pay GST; 3.1 The MAAR has based the aforesaid ruling on the following grounds: That the Appellant connects businesses in India with business partners in Dubai, which is nothing but supply of services. Appellant acts as a conduit between some business partners in Dubai and certain businesses in India: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elines granted by H on ble Supreme Court vide its Order dated 27.04,2021 is applicable in respect of any appeal which is required to be filed before Joint/ Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to he undertaken, and is not applicable to any other proceedings under GST Laws. 4.2 The Appellant have referred to Para 5.6.2 of the impugned ruling, wherein the MAAR has discussed and concluded that the Appellant qualify to be an intermediary ; Referring to the said para, the Appellant have further contended that the very base of the impugned Advance Ruling lacks factual findings, and had been pronounced hypothetically, and that the MAAR has wrongly jumped to the conclusion that Appellant is arranging or facilitating supply between businesses which would be involved in trading of goods or provisions of services without giving Appellant an opportunity of being heard. 4.3 Such conclusion drawn by the MAAR in the impugned Order is neither supported by any fact on record, nor backed by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses located in India and UAE; 4.8 The Appellant are prohibited from undertaking any commercial or business activity directly or indirectly in terms of Regulation 2(e) of the Foreign Exchange Management Regulations. 2016 (hereinafter referred to as FEMR ) which governs establishment of Liaison Office (hereinafter referred to as 'LO') in India, which provides as under: 'Liaison Office ' means a place of business to act as a channel of communication between the principal place of business or Head Office or by whatever name called and entities in India but which does not undertake any commercial /trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel. 4.9 Reference has also been made to Regulation 4(b) of FEMR in relation to permissible activities by LO reiterated below along with Schedule II mentioned therein: A person resident outside India permitted by the Reserve Bank under these Regulations to establish a branch or liaison office in India may undertake or carry on any activity specified in Schedule I or II, as the case may be, but shall not undertake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remitted from DCCI Dubai on a cost-to-cost basis, through normal banking channel: 4.13 Further, referring to Section 2(17)(a) of the CGST which defines the term 'Business', the Appellant have submitted that their activities would not fall under any of the activities mentioned in the said definition of Business which includes the terms like trade, commerce, manufacture, profession, vocation, adventure, wager and any other similar activities, and therefore, their activities will not be construed as Business and accordingly will not be construed as 'Supply' either, as provided under Section 7 of the CGST Act, 2017; 4.14 That the activities undertaken by the liaison office does not tantamount to 'Business', as any contrary interpretation would question the very existence of such office vis-a-vis RBI mandate and Foreign Exchange Management Regulations, and it would also invite heavy penal implications; 4.15 That the Appellant have further submitted that for any activity to qualify as 'supply , it requires presence of two different persons, one being the supplier, and another being the recipient; that the Appellant are mere extension of its Dubai Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with any actual supply which may or may not take place between such businesses. Appellant are not involved in any discussions, negotiations etc. between businesses in respect of any supply, which may or may not undertake between the businesses in India and those in Dubai. It should be noted that Appellant may not even be aware of whether the connected businesses in India and Dubai undertook any transaction or supply between each other at that time or in future; 4.20 That reference has also been made to an Advance Ruling under the service tax law in the case of M/s. Godaddy India Web Services Pvt. Ltd. Versus Commissioner of Service Tax, Delhi-IV [2016 (46) S.T.R. 806(A.A.R)]; Additional Submissions dated 06.08.2021 by the Appellant 5. The Appellant vide the additional submissions dated 06.08.2021 have expounded the activities undertaken by them as under: (i) The liasoning activities undertaken by the Appellant involve the sharing with the DCCI-H.O., Dubai, general information/knowledge, such as information relating to updates in regulation, policy framework, business trends, etc., in relation to generic business opportunities in UAE or India. (ii) The App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uss India-Dubai business landscapes in specific sectors like Logistics, Retail. Foods Beverages, etc. (vi) That the funds from DCCI H.O. are received based on expense forecast (cost-to-cost basis) for a quarter. That this arrangement is mainly to ensure the availability of funds at all times and to reduce the administrative burden of bank charges at DCCI H.O.'s end arising from frequent fund transfer. It has further been submitted that excess funds, if any. received by the Appellant, are set off against the expense forecast for the succeeding quarter. Respondent's Submissions 6. The Respondent/Jurisdictional Officer vide their letter dated 13.08.2021 has filed their comments/ submissions in the present appeal matter, the extracts of which are mentioned as under: (i) That Dubai Chamber's Representative Office in India, established in June, 2018 in Mumbai, is continuously engaging with business in India and Dubai. The India Office gathers first hand market information and identifies opportunity areas for the members of Dubai chamber, by participating at major events in India. Thus, the Mumbai office promotes the interest of Dubai companies intending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the reimbursement of monthly expenses incurred by them on cost-to-cost basis, the Respondent, by referring to the provisions of Section 2(31) which contains the definition of the term consideration , has submitted that any amount received in the course or furtherance of business will be treated as consideration. (vii) That the Appellant's contention that they are receiving remittance for the expenses incurred on cost-to-cost basis is already proved wrong on the basis of their financials where it was clearly shown that they have not received remittance on cost-to-cost basis, instead there was sufficient surplus, and this surplus was nothing but consideration and this fact is very well accepted by the authority in their ruling. On the other hand, the Appellant is not having any strong argument against this except that of avoiding the bank charges. Thus, they are receiving the fund in excess. Expenses like office Rent, Salary, Security services, etc. are pre-determined and known in advance for monthly payment/reimbursement and hence the excess amount received from their Dubai Head Office is nothing but profit earned by the DCCI-LO for providing services to Business entitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Liaison Office at the behest of its overseas Head Office would be construed as service rendered to self, which would be out of the purview of the supply as envisaged under Section 7(1)(a) of the CGST Act, 2017, and hence, not liable to GST. 7.4 By placing reliance on the aforementioned CESTAT Mumbai Judgments, the Appellant contended that they could not be held as an intermediary in terms of Section 2(13) of the IGST Act, 2017 as they were not arranging or facilitating any supply of goods or services or both. They further submitted that their roles are limited to only making initial introductions or refences of the Dubai business entities to the Indian business entities and vice-versa; and that they were neither involved nor concerned in any way in any business deals which, may or may not happen between the Dubai business entities and Indian business entities. As such, they did not play any role in arranging or facilitating any supply of goods or services or both. 7.5 Vide the aforesaid written submissions dated 09.03.2022, the Appellant further contended that even if their activities were considered as services being provided to their Dubai Head Office, they coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant as the said membership services were being provided by the Dubai H.O. to the Indian businesses. DISCUSSIONS AND FINDINGS 8. We have carefully gone through the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with all the additional submissions made by the Appellant during the course of the personal hearing proceedings. We have also examined the impugned Advance Ruling passed by the MAAR, wherein it has been held that the activities undertaken by the Appellant will tantamount to those of intermediary as provided under Section 2(13) of the IGST Act, 2017 for the reason that the Appellant are arranging and facilitating the supply of goods or services or both between the Indian businesses and the Dubai businesses by connecting them by way of introductions/references, and thereby, it has been held that the impugned activities will be covered under the ambit of Supply as provided under Section 7 of the CGST Act, 2017, and accordingly, the Appellant are required to take GST registration and discharge their GST liability on the amount received from their Dubai Head Office for undertaking the impugned activities at the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal, i.e.. their Dubai Head Office. Further, they also undertake organizing of various events, interaction programmes for providing platforms where the business entities of India get the information/details about the potential business partners of Dubai with whom they can collaborate to expand their businesses in Dubai along with other information which include updates in business regulation, policy framework, being introduced in Dubai for the foreign trade or investments. As all the aforesaid activities are being carried out by the Appellant on the direction received from their Dubai Head Office, therefore, the Appellant can aptly be termed as an agent of their Dubai Head Office. (ii) However, it is seen from the facts of the case that the Appellant is merely acting as a link between the businesses in India and Dubai by sharing the details of the potential business partners of India or Dubai, as the case may be, or by making references to, or introduction of the Dubai business entities to the Indian businesses and vice-versa, or by acting as an information centre for providing details regarding any updates taking place in the business regulations of Dubai, the potential are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Office. On perusal of the activities undertaken by the Appellant, it is noticed that the Appellant are undertaking a bunch of activities, which are enumerated hereinunder: a) By way of making introduction and references to the business entities in India who are seeking any distribution partners for their goods or services in Dubai and vice-versa by sharing the contact details from the database maintained by them for setting up the initial meetings between the businesses in India and the businesses in Dubai; b) By way of introducing Indian business firms, who seek the guidance for setting up of businesses in Dubai, with the professional services firms, such as. legal firms, business consultancy firms, etc., located in Dubai: c) By way of organizing events or interactions for business delegations wherein the Appellant arrange for physical meetings between the business delegations of Dubai and business entities of India and vice-versa for purpose of better understanding of the business landscapes in India and Dubai. The Appellant have further submitted that they have organized many seminars, round table discussions and conferences where they have engaged with various bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ription as Events, exhibitions, conventions and trade shows organization and assistance services . Further, the other activities of the Appellant such as sharing information with their Dubai Head Office about the regulation updates, policy framework, business trends, potential areas of business in India and activities like participation in the various seminars, conferences, trade fairs, exhibitions, etc. as a representative of the DCCI H.O. for promoting Dubai as an attractive international business hub, and for attracting foreign investors in Dubai and that of organizing various webinars for the Indian and Dubai businesses, can be grouped under support services having Service Accounting Code 998599 . and having description as Other support services nowhere else classified . Thus, it is opined that the Appellant are providing support services to their Dubai Head Office, which attracts GST at the rate of 18% (CGST @9% + SGST@9%) in terms of item (iii) of the entry at SI.No. 23 of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017, having the description Support services other than (i) and (ii) above . 15. Coming back to the second moot issue as to whether the said act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant are organizing such events in India, the place of supply of such services, provided by the Appellant, will be in India, i.e., in the taxable territory. 17. It is worth mentioning here that some components of the Appellant's supply of services are not in the nature of organization of events, such as those pertaining to the activities of participation in the various seminars, conferences, trade fair, exhibitions, reporting regulatory changes, potential areas of growth, business policies etc., on behalf of the Dubai Head Office, for promoting Dubai as international business hub. As discussed earlier, such services can be grouped under SAC 998599 having description as Other support services nowhere else classified . In such case, the place of supply of services will be governed by sub- section (2) of the Section 13 of the IGST Act. 2017, which reads as under: Section 13 (1)................. (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: Since the recipient of the services under question is located abroad, the place of supply of such services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s based in Dubai have to mandatorily take the membership of DCCI in order to carry out their businesses in Dubai against the prescribed membership fee to be paid to DCCI. They have further submitted that DCCI Liaison Office has been setup as a part of diplomatic relationship between India and Dubai to promote the trade and economic relationship between the two countries in pursuance to the meetings held between the Heads of the two countries, i.e., Hon'ble Prime Minister of India and the Hon'ble President of U.A.E. They have also submitted that the DCCI-L.O., like its Dubai H.O., is also a nonprofit organization, and is not involved in any commercial activities, whatsoever, in terms of guidelines issued by the R.B.I. under Foreign Exchange Management Act, 1999. As per the said guidelines, the Appellant are neither permitted to undertake any commercial transaction or business activities in India nor are they entitled to collect any fee or commission from any Indian firms for carrying out their liaisoning activities at the behest of its Dubai H.O. Thus, they have submitted that they are not undertaking any business as they are not receiving any consideration from any Indian c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an amount in the form of monthly reimbursement of expenses (cost- to- cost basis) from their Dubai Head Office, which will definitely be construed as consideration in terms of its definition provided under Section 2(31) of the CGST Act, 2017, which reads as under: 2. In this Act, unless the context otherwise requires, - (31) consideration in relation to the supply of goods or services or both includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; 23. It is also germane to mention that the aforesaid definition of the term business also includes the activities which are not done for pecuniary benefit. Hence, the contention, put forth by the Appellant that they are non-profit organization, and thereby, their activities will not constitute business, does not hold water, and hence, is not tenable. 24. The Appellant have also contended that they are mere extension of its Dubai Head Office, and are, therefore, not a separate legal entity. They further argued that since both DCCI-L.O. and DCCI H.O. are one and the same, therefore, the activities undertaken by the Appellant will not constitute supply in terms of Section 7 of the CGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill clearly constitute supply in terms of Section 7(1)(a) of the CGST Act. 2017 as all the prerequisites of the supply provided under Section 7(1)(a) of the CGST Act, 2017 are being satisfied by the activities undertaken by the Appellant at the behest of their Dubai Head Office. 27. The Appellant, to strengthen their contentions, have referred to the below mentioned Advance Ruling Orders: i. M/s. Wilhelm Fricke SE - AAR, Haryana [2021 (1) TMI 690]; ii. Habufa Meubelen B.V. - AAR, Rajasthan [2018 (7) TMI 883]; iii. M/s. Takko Holding GmbH - - AAR, Tamil Nadu [2018 (10) TMI 1315; iv. M/S. Fraunhofer-Gesellschaftzurforderung Der Angewandtenforschunge -Appellate AAR, Karnataka [2021 (2) TMI 1164]: In this regard, it is opined that the aforesaid Advance Ruling orders are not binding on this Appellate Authority, and hence, the same are not being considered here for the purpose of references or application of their ratio decided in the present case. Further in case of the decision given by AAAR, Karnataka in the case of M/s Fraunhofer-Gesellschaftzurforderung Der Angewandtenforschunge, it is observed that the facts in the said case are different that thos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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