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TMI Blog2022 (11) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... Clover Embassy Tech Village, Outer Ring Road, Devarbisanahalli Varthur Hobli, Bengaluru Urban, 560103 (herein after referred to as Appellant) against the Advance Ruling order No. KAR ADRG 19/2022 dated 1st July 2022. Brief Facts of the case: 3. The Appellant owns an e-commerce portal www.myntra.com and is a major Indian fashion e-commerce company. The Appellant is engaged in the business of selling of fashion and lifestyle products through the said e-commerce portal. In furtherance of its business, the Appellant entered into an Advertising Agreement with Lenzing Singapore Pte Ltd, a company registered in Singapore, in terms of which the Appellant is providing advertisement space to Lenzing on their e-commerce portal, mobile application or any other online platform of the Appellant. The advertisement material in the form of impressions will be provided by Lenzing to the Appellant for placement on the e-commerce portal website. The Appellant has no concern with the prospective customers of Lenzing. The Appellant is only involved in providing space on the web-platform to a non-resident foreign company for placing and displaying graphical impressions of advertisement material for a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant and Lenzing. They submitted that the Authority has failed to acknowledge that clause (e) of Section 97(2) is wide enough to include a question whether the activity amounts to export and hence, taxable or not. 6.2. They drew reference to the Central Excise Act, 1944 and the Finance Act, 1994 wherein a distinction was created on the jurisdiction of the High Court and Supreme Court in entertaining appeals from the Tribunal when the question of law related to the determination of rate of duty. They relied on the decision of the Karnataka High Court in the case of CST vs Scottwilson Kirkpatrick (2011 (23) STR 321 (Kar)), wherein the Hon'ble High Court held that the jurisdiction of the High Court does not extend to question relating to whether any services are taxable services or not; that further, the Delhi High Court in the case of CST, New Delhi vs Menon Associates reported in 2017 (49) STR 284 (Del) held that the issue relating to export of service would be brought under the phrase 'determination of rate of duty/tax/value of goods or services'. Therefore, applying the above principles, the question of whether a supply is export or not directly relates to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in Section 2(6) of the IGST Act which defines 'export of services' in as much as the Appellant is located in India, the recipient of service i.e Lenzing is located outside India, the place of supply of service is outside India, the payment for such services has been received in convertible foreign exchange and the Appellant and Lenzing are not merely establishments of a distinct person. They relied on the decision of the Tribunal in the case of Commissioner of Service Tax, Mumbai vs Wall Street Finance Ltd - 2018 (14) G.S.T.L 373 (Tri-Mumbai) - in the erstwhile Service Tax regime where the export of service requirements were similar and where the Tribunal had held that although the service for advertising and promoting activities of foreign entity done in India, benefit of the same was received abroad and hence the activity amounted to export. 6.6. As regards the place of supply of the services provided to Lenzing, Singapore, the Appellant submitted that the said transaction is not covered by any of the clauses (3) to (12) of Section 13 of the IGST Act; that in their case, the default provisions of Section 13(2) will squarely apply and place of supply of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of tax but had refrained from giving a ruling on the taxability of the activity. He submitted that even though the Authority had held that all other conditions for export of service were satisfied, they did not give a ruling on place of supply on the grounds that determination of tax liability will entail examining the provisions of place of supply which is not a subject covered under Section 97(2) of the CGST Act. 7.2. He submitted that determination of place of supply is incidental to determining the tax liability and this was clearly laid down by the Kerala High Court in the case of Sutherland Mortgage Services Inc. He also drew attention to the fact that the ratio of the said decision of the Kerala High Court was followed by this Appellate Authority in the case of the appeal filed by M/s Workplace Options India Pvt Ltd and this Authority had held that place of supply can be decided by the Advance Ruling Authority. 7.3. On the issue of taxability of the service of giving advertising space to a foreign entity, he submitted that the services provided by them qualifies in all respects as an 'export of service'. There is no disagreement with the findings of the Advance R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the words used in Section 101 and submitted that the phrase "pass orders as deemed fit" encompasses within it the power to pass any order, even a remand order. He drew a reference to Section 254 of the Income Tax Act wherein the phrase "pass such orders as it deems fit" as contained in the said Section was interpreted by the Supreme Court to mean that the Appellate authority has the power to pass an order or to remand the case. To this the Bench stated "as deemed fit" has a comma after it and not a full stop. Therefore, it has to be read in continuity with the rest of the statement as per principles of interpretation of statute. When reading the whole sentence this way it is clear that Section 101(1) can only confirm or modify the ruling appealed against. On this matter he promised to make detailed written submissions along with the relied upon case laws on this question which has been specifically asked by the Bench. He sought for a week's time to make these additional submissions. 8. The Appellant made additional written submissions on 14.10.2022 with regard to the query raised by the Members of this Bench regarding powers of this Authority under Section 101(1) of the CG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings before the authorities below. In view of the above, they submitted that this Authority can modify the impugned order passed by the AAR and decide the issue of taxability which ought to have been decided by the AAR. 8.2. The Appellant submitted that the expression 'as it thinks fit' is not curtailed by use of 'comma' followed by the words 'confirming or modifying'; that modifying the ruling is an expression of widest amplitude and would include modification by correcting the non consideration of judgment by the original authority and rendering the issue not decided by the original authority; that there is nothing in Section 101 which suggests that modification cannot include rendering a finding on an issue which was erroneously not decided by the AAR; that an appellate power cannot be construed in a manner which leads to making the very purpose of appeal redundant; that an interpretation which suggests that Appellate Authority cannot decide or grant relief on an issue which the original authority has erroneously not decided would mean that there would be no statutory remedy for such an error committed by original authority which is obviously not the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of place of supply which was merely incidental to the question of taxability of services and which the AAR has erred in not deciding in the present case. DISCUSSIONS AND FINDINGS 9. We have gone through the entire case records and considered the submissions made by the Appellant in their grounds of appeal, the submissions made at the time of personal hearing as well as the additional written submissions. Briefly stated the facts are, the Appellant provides space on its web portal for a consideration for advertisements by a foreign entity. They had sought for a ruling whether the transaction with the foreign entity is taxable under GST and also what is the classification of the service as well as the rate of tax. The lower Authority held that the service of providing advertising space on the web portal for a consideration will be classifiable under SAC 998365 as "Sale of internet Advertising Space (except on commission)" and the rate of tax is 9% CGST and 9% SGST in terms of entry Sl.No 21 of Rate Notification No 11/2017 Central Tax (Rate) dated 28-06-2017. On the issue of whether the activity of providing advertising space on their web portal to a foreign entity is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) to (g) of sub-section (2) of Section 97 of the CGST Act would make it clear that 7 items are enumerated as per clauses (a) to (g) of sub-section (2) of Section 97 and all those clauses other than clause (e) thereof are in specific terms. Whereas clause (e) of sub-section (2) of Section 97 of the CGST Act clearly mandates that the larger issue of "determination of liability to pay tax on any goods or services or both " would also come within the ambit of the questions to be raised and decided by the Advance Ruling Authority on which advance ruling could be sought and rendered under the said provisions. Whereas Clauses (a), (b), (c), (d), (f) & (g), i.e. the clauses other than clause (e), are in specific "pigeon holes " and the provision as per clause (e) of sub-section (2) of Section 97 is in wide terms and the Parliament has clearly mandated that the latter issue of determination of liability to pay tax on any goods or services or both, should also be matters on which the applicant concerned could seek advance ruling from the Advance Ruling Authority on which the said authority is obliged to render answers thereto. The Parliament has made the said provision envisaging that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export of service". They have also gone into great lengths to argue that the appellate powers are an extension of the original proceedings before the lower authorities and thus, has powers to decide questions which are germane to the dispute involved; that when the lower authority has erroneously failed to decide the issue relating to taxability of the services rendered by the Appellant to its foreign customers, the same can be decided by the Appellate Authority in exercise of its appellate powers. We have gone through the detailed submissions made by the Appellant in this regard and also gone through the case laws which they have relied upon to buttress their argument that we are well within our authority to pass an original ruling in this case. This Appellate Authority is a creature of the statute and draws its powers from the provisions of Sections 99 to 106 of the KGST/CGST Acts. In terms of Section 100(1) of the said Acts, "The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced under sub-section (4) of section 98, may appeal to the Appellate Authority." Further, where the members of the lower Authority differ on any questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is passed in terms of Section 98(2). However, in terms of Section 100 of the CGST Act, an appeal can by filed before the Appellate Authority only against an order passed under Section 98(4). The provisions of Section 100 make it very clear that an appeal cannot be filed before this Authority when any application for advance ruling has been rejected by the lower Authority in terms of Section 98(2). In the instant case the application for advance ruling filed by the Appellant had 2 questions. The lower Authority has pronounced a ruling on the 2nd question in terms of Section 98(4) while the 1st question of the application was unanswered on the grounds that it was outside the scope of Section 97(2). To this extent, it can be construed that the 1st question of the application relating to the taxability of the transaction with the foreign entity was rejected by the lower Authority in terms of Section 98(2). Therefore, legally speaking, no appeal can be filed before us against the rejection of ruling on the question of taxability. However, having filed the appeal which has also been heard by us, we can only go so far as to say whether the lower Authority was correct in not passing a ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arallel with Section 254 of the Income Tax Act which states that the Appellate Tribunal after giving both the parties to the appeal, an opportunity of being heard, pass such order as it thinks fit; that the Supreme Court has interpreted this phrase to mean that the Appellate Tribunal has the power to pass an order or to remand the case. Section 101(1) of the CGST Act states "The Appellate Authority may, after giving the parties to the appeal or reference an opportunity of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed against or referred to." Here the phrase "pass such order as it thinks fit" is followed by a comma and not a full stop as in the case of Section 254 of the Income Tax Act. Therefore, while reading Section 101(1), the phrase "pass such orders as it thinks fit" has to be read in continuity with the rest of the sentence following the comma. Such a reading makes it clear that there is no provision for an order of remand for fresh decision and the obvious intention of the Legislature seems to be that the Appellate Authority should itself decide the question. Moreover, the provision that applications rejected in terms of Section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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