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2020 (12) TMI 1322 - AAAR - GSTRectification of mistake - error apparent on the face of record - Export of services or not - Commission received by the Applicant in convertible Foreign Exchange for rendering services - intermediary services - zero rated tax - section 16 (1) (a) of the Integrated Goods and Services Tax Act, 2017 - HELD THAT - On perusal of the aforesaid Order dated 11.12.2019, it is seen that all the submissions and contentions put forth by the Applicant have been duly considered by this Appellate Authority. It was only after due considerations of all the submissions and contentions, set forth by the Applicant. that this Appellate Authority had arrived at the conclusion that there was no error apparent on the face of the record. as being alleged by the Applicant, and hence, rectification application dated 21.08.2019 was rejected by observing that the interpretations, being drawn by the Applicant with regard to Section 97(2)(e) of the CGST Act, 2017 which empowers the Authority for Advance Ruling as well as the Appellate Authority for Advance Ruling to pronounce ruling on the question of determination of the liability to pay tax on any goods or services or both, was clearly debatable in view of the differing interpretations drawn by this Appellate Authority, and therefore, this Appellate Authority vide Order dated 11.12.2019 had held that there was no error apparent on the face of the record, which would warrant rectification of the original Order dated 22.03.2019 passed by this Appellate Authority under Section 102 of the CGST Act, 2017. For arriving at the aforesaid conclusion, this Appellate Authority had considered all the case laws, cited by the Applicant in his original application dated 21.08.2019, wherein the Hon'ble Courts and Tribunals have laid down the principles of law with regard to the true interpretation of the term 'mistake' or 'error', when used with the term apparent' in the various Acts, the presence of which in the Order would warrant the invocation of the rectification provision laid down under those particular Acts. As regards the supplementary submissions filed by the Applicant on 16.12.2020, wherein it was stated that the Department has accepted the ruling pronounced by the Hon'ble Kerala High Court in SUTHERLAND MORTGAGE SERVICES INC VERSUS THE PRINCIPAL COMMISSIONER OFFICE OF THE PRINCIPAL COMMISSIONER OF CUSTOMS, CENTRAL GST AND CENTRAL EXCISE, KOCHI, THE COMMISSIONER OF STATE TAX, ASSISTANT COMMISSIONER, KAKKANAD RANGE-4 2020 (3) TMI 186 - KERALA HIGH COURT , it is stated that it has no bearing upon the outcome of the instant Application filed by the Applicant. The Miscellaneous Application dated 25.09.2020 filed by the Applicant is not legally maintainable, and hence the same is liable to be rejected
Issues Involved:
1. Whether the "Commission received by the Applicant in convertible Foreign Exchange for rendering services as an “Intermediary” is an “export of services” falling under section 2(6) & outside the purview of section 13 (8) (b) of the IGST Act, 2017. 2. Whether the Appellate Authority for Advance Ruling (AAAR) has jurisdiction to determine the place of supply. 3. Whether there was an error apparent on the face of the record in the original AAAR order. 4. Whether the miscellaneous application for restoration of the rectification application is legally maintainable. Detailed Analysis: 1. Commission Received as Export of Services: The Applicant, a distributor for a German company, received commission in foreign currency for procuring purchase orders from Indian customers. The Maharashtra Advance Ruling Authority (MAAR) ruled that the services provided by the Applicant were intermediary services, and thus, the place of supply would be the location of the supplier (Maharashtra). Consequently, the services were considered inter-state supply and liable to tax at 18%. The Applicant contended that the commission should be treated as export of services, attracting zero-rated tax under section 16 (1) (a) of the IGST Act, 2017. 2. Jurisdiction of AAAR to Determine Place of Supply: The Applicant appealed against the MAAR ruling, but the AAAR held that determining the place of supply does not fall within the purview of Advance Ruling. The Applicant filed for rectification, arguing that the AAAR had jurisdiction under section 97(2)(e) of the CGST Act, 2017, to determine the place of supply as it pertains to the liability to pay tax. The Applicant cited the Kerala High Court judgment in the case of Sutherland Mortgage Services Inc., which supported the view that determining the place of supply falls within the jurisdiction of the Advance Ruling Authority. 3. Error Apparent on the Face of the Record: The Applicant claimed that the AAAR committed an error by not considering the CBIC Circular No. 107/29/2019-GST, which clarifies that a person supplying services on his own account is not an intermediary. The AAAR, in its order dated 11.12.2019, rejected the rectification application, stating that the interpretation of section 97(2)(e) was debatable and not an error apparent on the face of the record. The AAAR referenced several judicial pronouncements, including the Supreme Court judgments in T.S. Balaram, ITO Vs. Volkart Bros. and Parsion Devi and Others vs. Sumitri Devi and Others, to support its conclusion that a debatable point of law does not constitute an apparent error. 4. Legality of Miscellaneous Application for Restoration: The Applicant filed a miscellaneous application dated 25.09.2020, seeking restoration of the rectification application. The AAAR held that there is no provision under the CGST Act, 2017, to admit such an application once a rectification order has been passed. The AAAR also noted that the Kerala High Court judgment was not available at the time of the original order and thus could not be considered an apparent error. The AAAR reiterated that an erroneous decision cannot be reheard and corrected under the guise of rectification, as per the Supreme Court's ruling in Parsion Devi and Others vs. Sumitri Devi and Others. Conclusion: The AAAR concluded that the miscellaneous application dated 25.09.2020, seeking restoration of the rectification application, is not legally maintainable and is liable to be rejected. The original order dated 22.03.2019 and the subsequent order dated 11.12.2019 stand as they are, with no error apparent on the face of the record warranting rectification. The AAAR emphasized that the determination of the place of supply does not fall within its jurisdiction as per section 97(2) of the CGST Act, 2017.
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