2019 (7) TMI 1107 - AAR - GST

Classification of supply - Supply of Goods or Supply of Services - online tendering - offline tendering - HSN classification - administrative service or specific service? Whether online tendering to be considered as Supply of Goods or Supply of Services? - HELD THAT - Online Tendering does not satisfy the definition of goods . The definition of services as mentioned in the Business Dictionary Intangible products such as accounting, banking, cleaning, consultancy, education, insurance, expertise, medical treatment, or transportation. Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when services are sold, and they (1) cannot be stored or transported, (2) are instantly perishable, and (3) come into existence at the time they are bought and consumed. In the present case at hand, the provisions of e-tender, which is intangible is delivered through telecommunication network or internet. Thus, the intention of the legislature is very clear, to treat such activities as supply of services - Online tendering is a type of service which are rendered by NMMC to the various person who are willing to fulfill their requirement for procurement of goods or services which will be raised on their website (www.nmmc.gov.in) or on common portal of the Government of Maharashtra (www.mahatender.gov.in) or on any other authorized website. Whether offline tendering to be considered as Supply of Goods or Supply of Services? - HELD THAT - Offline Tendering does not satisfy the definition of goods , in its entirety. The definition of services as mentioned in the Business Dictionary Intangible products such as accounting, banking, cleaning, consultancy, education, insurance, expertise, medical treatment, or transportation. Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when services are sold - Hence offline tendering will also be considered as rendering of services. Under which tariff head the Online Tendering should get taxed? - HELD THAT - Since Online Tendering as a service is not specified anywhere, the same should get taxed under Service Heading 9997. Under which tariff head the Offline Tendering should get taxed? - HELD THAT - Since Offline Tendering as a service is not specified anywhere, the same should get taxed under Service Heading 9997. If tendering is service then whether it will be considered as administrative service or specific Services? - HELD THAT - The tendering will be covered under the residual Services Heading 9997.

Issues Involved:
1. Classification of online tendering as Supply of Goods or Supply of Services.
2. Classification of offline tendering as Supply of Goods or Supply of Services.
3. Appropriate tariff head for taxing Online Tendering.
4. Appropriate tariff head for taxing Offline Tendering.
5. Classification of tendering as administrative service or specific service.

Issue-wise Detailed Analysis:

1. Classification of Online Tendering:
The applicant, Navi Mumbai Municipal Corporation, raised the question of whether online tendering should be classified as Supply of Goods or Supply of Services. The Authority observed that online tendering involves the entire process being conducted online, including application, payment of fees, and submission of bids. As per Section 2(56) of the CGST Act, 2017, goods are defined as movable property excluding money and securities. Online tendering does not meet this definition. Instead, it fits within the definition of services under Section 2(12) of the CGST Act, which includes anything other than goods, money, and securities. The Authority concluded that online tendering is a service, as it involves intangible products delivered via electronic networks, aligning with the definition of Online Information and Data Access or Retrieval Services under Section 2(17) of the IGST Act.

2. Classification of Offline Tendering:
For offline tendering, the process involves manual procurement of tender forms and submission of bids in hard copy. The Authority noted that the difference between online and offline tendering is the medium of tender form distribution. Despite the physical aspect of offline tendering, it also involves intangible services like application processing and fee payments. As per Section 2(12) of the CGST Act, offline tendering does not entirely fit the definition of goods but aligns with the definition of services. Therefore, the Authority determined that offline tendering should also be classified as a service.

3. Tariff Head for Online Tendering:
The GST Tariff for services includes Chapter 99, covering Headings 9954 to 9999. Online tendering is not specifically mentioned under any heading. The Authority identified Heading 9997, which covers miscellaneous services not specified elsewhere, as the appropriate tariff head for online tendering. Thus, online tendering should be taxed under services heading 9997.

4. Tariff Head for Offline Tendering:
Similarly, for offline tendering, the Authority found that it also falls under the category of services. Since offline tendering is not explicitly listed under any specific heading, the Authority concluded that it should be taxed under the same services heading 9997 as online tendering.

5. Classification as Administrative or Specific Service:
The final issue addressed whether tendering should be considered an administrative service or a specific service. The Authority, after extensive deliberation, concluded that tendering falls under the residual Services Heading 9997, indicating it is a type of miscellaneous service not classified elsewhere.

Conclusion:
The Authority for Advance Ruling, Maharashtra, concluded that both online and offline tendering are to be classified as Supply of Services. Both types of tendering should be taxed under the services heading 9997, which covers miscellaneous services. Tendering is not specifically categorized as an administrative or specific service but falls under the residual services category. The detailed analysis and conclusions were made in accordance with the provisions of the CGST Act and MGST Act, 2017.

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