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2018 (12) TMI 650 - AAR - GSTLevy of GST - zero rated export supply or not - export of service - photography service of diamonds - diamonds received on returnable basis - interstate supply or intrastate supply - Held that - There is no doubt that the supply of service in the present case satisfies conditions at (i) and (ii) of Section 2(6) of the IGST Act. However, to qualify as an export of services all the conditions must be satisfied simultaneously As per condition at (iii) above, which pertains to place of supply of service and that the place of supply of service shall be outside India. Section 13 of the IGST Act contains provisions for determining the place of supply of services where the location of the supplier of the services or the location of the recipient of services is outside India - The place of supply of service shall be determined as per the provision contained in section 13 of the IGST Act. The said section has been divided into two parts. The subsections (3) to (13) provides for determination of place of supply of service, for service other than those listed in sub-sections (3) to (13) - In the instant case and from the perusal of transactions, except subsection (3) all other subsections are irrelevant for the purpose of determination of place of supply. The main contention of the applicant for non-applicability of section 13 (3) (a) of the IGST Act regarding determination of place of supply is that the goods which are required to be made physically available must be owned or made available only by the recipient of services. This line of argument in this respect is hard to accept and is not tenable. However from the plain reading of subsection (a) of subsection 3 of Section 13 of the IGST Act, we do not agree with the contention of the applicant that the goods that are required for rendering service by the supplier must be owned or made available only by the recipient of services. As per above clause, recipient of service who want to avail services has to make goods physically available on direct or indirect directions to the service provider and it does not matter who owned the goods. It is the cordial rule of interpretation that where the language used by the legislature is clear and unambiguous then the plain and natural meaning of the words should be supplied to the language used and resort to any rule of interpretation to unfold the intention is permissible only where there is any ambiguity. There is no need that the goods physically required for rendering services must be owned by the recipient of the services, on the other hand it is sufficient for the recipient to make them physically available to the service provider for rendering services - Thus in this case the event of photography services pertaining to diamonds made physically available by the recipient of services to the provider of services is over and the service is clearly provided in India where the services are actually performed. In the case before us it is seen that the location of the supplier of service is in Mumbai and the place of supply as determined as per provisions of section 13(3) (a) of the IGST Act is also in Mumbai, a place where the services are actually performed. And therefore as per section 8(2) of IGST Act, the services shall be treated as intrastate supply and would be liable to tax under the provisions of MGST Act and CGST Act. Ruling - The supply of photography service is liable to SGST under the Maharashtra Goods and Service Tax Act, 2017 (MGST Act, 2017) and CGST under Central Goods and Service Tax Act, 2017 (CGST Act) or IGST under Integrated Goods and Service Tax Act, 2017 (IGST Act, 2017). It is not a zero rated export supply within the meaning of Section 2(23) r/w Section 2(6) of the IGST Act, 2017.
Issues Involved:
1. Taxability of photography services under SGST, CGST, or IGST. 2. Determination of whether the supply of photography services qualifies as a zero-rated "export" supply under Section 2(23) r/w Section 2(6) of the IGST Act, 2017. Detailed Analysis: Issue 1: Taxability of Photography Services The applicant, an Indian private limited company (Segoma India), provides photography services for diamonds to its parent company in Israel (Segoma Israel). These services are performed in India, where diamonds are physically made available to Segoma India by customers of R2Net, a US-based company. The applicant charges Segoma Israel for these services, and Segoma Israel pays in convertible foreign exchange. The Authority for Advance Ruling (AAR) examined whether the supply of photography services is liable to SGST and CGST or IGST. According to Section 13(3)(a) of the IGST Act, the place of supply of services requiring goods to be physically available is where the services are performed. Since the photography services are performed in India, the place of supply is India. Therefore, the supply of photography services is subject to SGST and CGST. Issue 2: Zero-rated "Export" Supply To qualify as an export of services under Section 2(6) of the IGST Act, the following conditions must be met: 1. The supplier of service is located in India. 2. The recipient of service is located outside India. 3. The place of supply of service is outside India. 4. Payment for such service is received in convertible foreign exchange. 5. The supplier and recipient are not merely establishments of a distinct person as per Explanation 1 in Section 8 of the IGST Act. The AAR confirmed that the supplier (Segoma India) is located in India and the recipient (Segoma Israel) is located outside India, satisfying conditions (i) and (ii). However, the AAR found that the place of supply of service is in India, as the photography services are performed in India, failing condition (iii). While the payment is received in convertible foreign exchange, satisfying condition (iv), the AAR determined that Segoma India and Segoma Israel are not distinct persons under Explanation 1 of Section 8, failing condition (v). The AAR concluded that the supply does not qualify as an export of services, as it does not meet all the conditions under Section 2(6) of the IGST Act. Consequently, the supply is not zero-rated and is subject to SGST and CGST. Order: 1. The supply of photography services is liable to SGST and CGST. 2. The supply does not qualify as a zero-rated "export" supply under Section 2(23) r/w Section 2(6) of the IGST Act, 2017.
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