2019 (7) TMI 1388 - AAR - GST

Liability of GST - Export of services - assessment of tax on supplies based on taxability as accorded to Zero rated supply - scope of Advance Ruling application - HELD THAT - This authority can give rulings only as per the provisions mentioned in Sections 95 and 97 of the Act. Section 95 says that the term advance ruling means a decision provided by this authority to the applicant on matters or questions specified in subsection 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. From the provisions of section 95 it is seen that, there are the conditions for filing of advance ruling application i.e. the applicant shall ask the question in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by them on matters or questions specified in subsection 2 of Section 97, and to that extent only shall the authority answer/give a ruling to those category of issues. From the perusal of the question it is seen that their query is with respect to assessment of their supplies based on taxability . Such query does not fall under any of the clauses mentioned from (a) to (g) of subsection (2) of section 97 of CGST ACT. The question does not fall within the purview of Section 97 of the CGST Act and is therefore not answered.

Issues Involved:
1. Classification of services as 'export of service.'
2. Applicability of 'Zero rated supply' taxability.
3. Determination of whether the services qualify as 'intermediary services.'

Issue-Wise Detailed Analysis:

1. Classification of Services as 'Export of Service':
The applicant, Cummins Technologies India Private Limited (CTIPL), provides various support services to its group companies, both in India and overseas. The applicant sought an advance ruling to determine if these services can be classified as 'export of service' under the Integrated Goods and Services Tax Act, 2017 (IGST Act). According to Section 2(6) of the IGST Act, a service qualifies as an export if:
- The supplier of service is located in India.
- The recipient of service is located outside India.
- The place of supply of service is outside India.
- The payment for such service is received in convertible foreign exchange.
- The supplier and recipient are not merely establishments of a distinct person.

CTIPL argued that it fulfills all these conditions, as it is located in India, provides services to overseas group companies, receives payment in convertible foreign exchange, and the group companies are independent legal entities. Therefore, the services should be classified as 'export of service.'

2. Applicability of 'Zero Rated Supply' Taxability:
CTIPL contended that since the services qualify as 'export of service,' they should be treated as 'Zero rated supply' under Section 16 of the IGST Act. This means no tax would be payable on such supplies, and the supplier would be eligible for a refund of input tax credit. The applicant emphasized that the services provided are independent and not in the nature of facilitation or arrangement between the group company and any third party, which would otherwise classify them as intermediary services.

3. Determination of Whether the Services Qualify as 'Intermediary Services':
The applicant sought clarification that the services do not fall under the definition of 'intermediary services' as per Section 2(13) of the IGST Act, which defines an intermediary as a broker, agent, or any person who arranges or facilitates the supply of goods or services between two or more persons but does not include a person who supplies such goods or services on his own account. CTIPL argued that its services are provided on a principal-to-principal basis and are independent of any transaction between the group company and its vendors or customers. The applicant cited judicial precedents, including the Advance Ruling in the case of Godaddy India Web Services Pvt. Limited, which held that similar services were not intermediary services but business support services.

Observations and Conclusion:
The Authority for Advance Ruling (AAR) examined the facts and submissions. It noted that the applicant's query pertained to the assessment of taxability based on 'Zero rated supply,' which does not fall under any of the categories specified in Section 97(2) of the CGST Act. The AAR emphasized that it could only provide rulings on matters explicitly mentioned in Section 97(2), such as classification of goods or services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, and whether an activity amounts to a supply of goods or services.

Since the applicant's query did not fall within these specified categories, the AAR refrained from answering the question and concluded that the application was not maintainable.

Order:
The AAR ruled that the question raised by the applicant does not fall within the purview of Section 97 of the CGST Act and, therefore, was not answered.

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