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2021 (3) TMI 1344 - AAAR - GSTClassification of supply - supply of goods or supply of services - financial assistance to be received by the Appellant are covered as consideration for supply or not - exempted supply or non-taxable supply - Zero Rated Supply or not - export of service or not - reversal of input tax credit - service is classifiable under SAC 9997 as other services nowhere else classified or not - applicability of SI. No 35 of the Notification-11/2017- Central Tax (Rate) dated 28.06.2017 / Sl. No. 35 of the Notification- 11/2017-State Tax (Rate) dated 29.06.2017 / SI. No. 35 of the Notification-8/2017- Integrated Tax (Rate) dated 28.06.2017. HELD THAT - The Appellant is undertaking multiple activities under different categories, i.e., activities related to construction, training, etc., against the lumpsum amount paid by their Principal, which can clearly be considered as composite supply in terms of Section 2(30) of the CGST Act, 2017 - In the present case, the Appellant is undertaking multiple taxable supplies of services such as construction of training workshop, providing training to apprentices, unskilled workers, students of various technical institutes, etc. All these activities, which are being supplied in conjunction with each other, can aptly be said to be naturally bundled where the principal supply will be training services being provided to the various candidates as mentioned. The activities related to the construction of the training workshop can be construed as ancillary services to this principal supply, i.e., training service, provided to various candidates as the same are essential for the said principal supply. All the activities are performed by the Appellant for the completion of the project run by their German Principal. Since the objectives of the said project is to provide the vocational/on-job training to the various candidates, like, apprentices, unskilled workers, students, etc. from various institutions and colleges to mitigate the investment related risks in developing and emerging countries. Hence, the entire gamut of activities performed by the Appellant can be construed as composite supply where the principal supply will be supply of training services to the various candidates from the selected institutions with all other supplies being ancillary and incidental to the principal supply. Now, once the activities undertaken by the Appellant are held as composite supply where the training service being imparted to the various candidates is the principal supply, the said supply will squarely be covered under the SAC 999294 prescribed at SI. No. 600 of the Annexure to the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and bearing the description Other education and training services nowhere else classified . Since it has been established that the Appellant is providing composite services of which the training services is the principal supply, it can be said that the Appellant is undertaking the performance-based service where the said training services are supplied to individuals, such as apprentices, unskilled workers, students of various technical institutes and colleges, who can be said to be representing on behalf of the recipient, i.e., the Principal located in Germany as the Appellant are receiving the consideration/financial assistance for undertaking the aforesaid training services being provided to above-said individuals from their German Principal, therefore, it can unambiguously be said that the above-mentioned individuals whom the Appellant are rendering training services are acting on behalf of the recipient, in this case, the German Principal of the Appellant. It is established beyond doubt that the activities undertaken by the Appellant by way of providing training services to the individuals acting on behalf of their Principal are performance-based services. Since, in this case, the said services are performed at the premises of the Appellant, which is in India, the place of supply of the impugned services will also be in India in terms of Section 13(3)(b) of the IGST Act, 2017. Zero-rated supply in terms of Section 16(1) of the IGST Act, 2017 or not - export of service or not - HELD THAT - The said supply of services will not be considered as export of services on account of the above findings that the place of supply of the services under question will not be outside India, and thereby, not complying with the clause (iii) of the Section 2(6) of the IGST Act, 2017, which stipulates five conditions or clauses that are required to be fulfilled for any supply of service to qualify for export of service.
Issues Involved:
1. Classification of services provided by the Appellant. 2. Determination of whether the services qualify as 'export of services' and 'zero-rated supply' under the IGST Act, 2017. 3. Determination of the place of supply of services. Issue-wise Detailed Analysis: 1. Classification of Services Provided by the Appellant: The Appellant is engaged in various activities, including the construction of a training center and providing training to apprentices, unskilled workers, and students. The Maharashtra Authority for Advance Ruling (MAAR) initially classified these activities under SAC 999792 ("Agreeing to do an act"). However, upon appeal, it was determined that the activities constitute a "composite supply" with the principal supply being training services. Thus, the appropriate classification is under SAC 999294 ("Other education and training services nowhere else classified"). 2. Determination of Whether the Services Qualify as 'Export of Services' and 'Zero-Rated Supply': The Appellant contended that their services should be considered as 'export of services' and thus qualify as 'zero-rated supply' under Section 16(1) of the IGST Act, 2017. However, for services to qualify as 'export of services' under Section 2(6) of the IGST Act, 2017, five conditions must be met, including that the place of supply should be outside India. Since the place of supply for the Appellant's services was determined to be in India, the services do not meet the criteria for 'export of services' and cannot be considered 'zero-rated supply'. 3. Determination of the Place of Supply of Services: The Appellant argued that the place of supply should be determined under Section 13(2) of the IGST Act, 2017, which prescribes the place of supply as the location of the recipient (Prettl GmbH, located outside India). However, the services provided by the Appellant were deemed to be performance-based services requiring the physical presence of the trainees (apprentices, unskilled workers, students) in India. Therefore, the place of supply was determined to be in India under Section 13(3)(b) of the IGST Act, 2017. Conclusion: The Appellate Authority modified the MAAR's ruling, classifying the services under SAC 999294 and determining that the place of supply is in India. Consequently, the services do not qualify as 'export of services' or 'zero-rated supply'. The appeal filed by the Appellant was dismissed.
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