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2019 (10) TMI 670 - AAR - GSTClassification of services - Support Services or not - Intermediary services or not - back-end support services provided by the applicant to the Juniper Inc. under the agreement - whether classified under Tariff Heading 9985? - N/N. 11/2017 - Central Tax (Rate) dated 28.06.2017. HELD THAT - The works that has been entrusted to the applicant by Juniper shows that the Juniper Inc has outsourced its works to the applicant and the applicant is providing his services either updating in the system and if the system is not able to process the work, then it has to do the -process manually and update the system. There is no interaction of the applicant with the third persons, either directly or indirectly and the applicant is only concerned with the work which has been entrusted to it on the system. The issue is whether the applicant is arranging or facilitating the supply of services between two or more persons. The terms of the agreement are verified and found that the applicant has outsourced a part of the activity of supply of services by Juniper Inc to his clients or recipients of such service, to the applicant and the applicant is providing the service in relation to the service provided by Juniper Inc. The exact meaning of the word facilitating has not been defined or explained in the Act or Rules. It is seen that the applicant is engaged in providing the services themselves. In other words there is no third person involved in providing services to Juniper or receiving from juniper where the applicant may have acted as the go in between. The applicant is thus not involved as an intermediary in terms of the contents of the statement of work provided by the applicant. Whether the services provided by the applicant to Juniper Inc would be classifiable as Support Services under the Tariff Heading 9985 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017? - HELD THAT - It is very clear that the activities of the applicant is a support service provided to the recipient of services and are not covered under the Groups from 99851 to 99855. It is also not covered by the Service Code 998591 to 998594 and 998596 to 998598 - The nature of the works done is verified and found that it is not office administration work done for others on contract basis and hence they cannot be covered under Service Code 998594. Whether the services rendered can be covered under the term document preparation services ? - HELD THAT - The contract agreement is verified and found that the applicant is not just preparing the document but performs activities on the day to day transactions of Juniper Inc like Screening of restricted parties, screening of orders, screening of shipments, maintenance of shipping documents, doing manual processing of transactions on HOLD, auditing of entries, Record keeping etc. Hence the activities of the applicant cannot be covered under the Service Code 998595 and hence covered under the Service Code 998599.
Issues Involved:
1. Classification of back-end support services under the Tariff Heading 9985. 2. Determination of whether the services qualify as Intermediary services. Issue-wise Detailed Analysis: 1. Classification of Back-End Support Services: The applicant provides back-end support services to Juniper Networks Inc. under a Trade Compliance Services Agreement. The services include Trade Compliance Operations Management, Manual Documentation Support, and other administrative tasks. The applicant contends that these services should be classified under 'Support Services' as per Tariff Heading 9985 of Notification 11/2017 - Central Tax (Rate) dated 28.06.2017. The applicant argues that the services provided are similar to those covered under the explanatory notes released by the CBIC, which include document preparation and processing services. The applicant also refers to the pre-GST definition of 'Support Service' under Section 65B(49) of the Finance Act, 1994, which includes infrastructural, operational, administrative, logistic, marketing, or any other support services outsourced by a company. Upon verification of the Trade Compliance Services Agreement, the authority found that the applicant performs services independently, without interaction with third parties, and provides support services directly to Juniper Inc. The nature of the work includes compliance screening, manual documentation, and administrative support, which align with the description of 'Support Services' under Tariff Heading 9985. The authority concluded that the services provided by the applicant are not covered under Service Codes 998591 to 998594 and 998596 to 998598. Instead, they fall under Service Code 998599, which includes 'Other support services not specified elsewhere.' 2. Determination of Intermediary Services: The applicant asserts that the services provided do not qualify as 'Intermediary services' under Section 2(13) of the IGST Act, which defines an intermediary as a 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. The applicant highlights that the services are provided on a principal-to-principal basis directly to Juniper Inc. and not to any third party or customers of Juniper Inc. The applicant does not secure orders or facilitate transactions between Juniper Inc. and its customers. Instead, the applicant performs tasks based on guidelines provided by Juniper Inc. and reports directly to them. The authority verified the agreement and found that the applicant is engaged in providing services independently without acting as an intermediary. The applicant's role involves performing outsourced processes and updating systems without facilitating any supply of goods or services between Juniper Inc. and its customers. Based on the nature of the services and the terms of the agreement, the authority concluded that the services provided by the applicant do not qualify as 'Intermediary services.' Ruling: 1. The back-end support services provided by the applicant to Juniper Inc. are classifiable as 'Support Services' under the Tariff Heading 9985 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, specifically under Service Code 998599. 2. The services in question are not Intermediary Services.
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