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2020 (6) TMI 444 - AAR - GSTExport of Service or not - design Development services provided by Lear India to Lear entities situated abroad - whether services fall under the category of OIDAR services? - HELD THAT - A letter dated 23.01.2020 was submitted by applicant, wherein it was requested that they may be allowed to voluntarily withdraw the first question made in the subject application. The request of the applicant to withdraw the first question of application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case. Whether the Design Development services provided by the Applicant to Lear entities situated aboard would fall under the category of OIDAR services? - HELD THAT - Prima facie this is a question, pertaining to classification and is covered by Section of the CGST Act, 2017 - he subject services are presently being classified by them as Consulting Engineering Services . However, the GST department has issued them a Show Cause Notice 27.08.2018 proposing to classify the services of the Applicant under On-line database access services wherein the SCN has alleged that the services provided by the Applicant is bundled service of design, prototype, testing in virtual world through computer network and online database access gives the essential characteristic of OIDAR to the said bundled service - In view of the provision to Section 98(2) of the CGST Act, 2017, this authority cannot admit the application in respect of this question because the question raised in the application is already pending before the department under the provisions of this Act as is seen from the SCN issued to the applicant on 27.08.2018.
Issues Involved:
1. Whether the design & development services provided by Lear India to Lear entities situated abroad would amount to Export of service. 2. Whether the design & development services provided by Lear India to Lear entities situated abroad would fall under the category of OIDAR services. Issue-Wise Detailed Analysis: 1. Whether the design & development services provided by Lear India to Lear entities situated abroad would amount to Export of service: The applicant, M/s. Lear India Engineering LLP, initially sought an advance ruling on whether the design and development services provided to Lear entities abroad would qualify as an export of service under the GST laws. The applicant detailed their operations, which included providing research and development services for automotive applications, particularly in the Seating Division and E-Systems Division. These services involved activities like engineering, R&D, technical assistance, product design, and product engineering, with the resulting intangibles owned by the service recipient. The applicant charged based on hours spent and certain reimbursements. However, the applicant later withdrew this question, acknowledging that determining the place of supply of services is outside the purview of the Advance Ruling Authority. Consequently, the authority allowed the withdrawal of this question without delving into the merits or detailed facts of the case. 2. Whether the design & development services provided by Lear India to Lear entities situated abroad would fall under the category of OIDAR services: The applicant contended that their services should not be classified as OIDAR (Online Information and Database Access or Retrieval) services but rather as consulting engineering services. They argued that the services involved design, prototype, and testing in a virtual environment, which did not fit the definition of OIDAR services. The GST department had issued a Show Cause Notice (SCN) on 27.08.2018, proposing to classify the services as OIDAR, asserting that the bundled nature of the services (design, prototype, testing through computer networks, and online database access) gave them the essential characteristic of OIDAR services. The jurisdictional officer supported the applicant's position, stating that the services were performance-based and should be classified under consulting engineering services. They also noted that even if classified as OIDAR, the services would qualify as an export of service under the GST regime, as the location of the service recipient was outside India. Upon reviewing the facts, documents, and submissions, the Authority for Advance Ruling observed that the question regarding the classification of services was already pending before the department, as evidenced by the SCN dated 27.08.2018. According to Section 98(2) of the CGST Act, 2017, the authority cannot admit an application if the question raised is already pending or decided in any proceedings under the Act. Order: Question 1: Whether the design & development services provided by Lear India to Lear entities situated abroad would amount to Export of service. Answer: This question has been voluntarily withdrawn by the applicant. Question 2: Whether the design & development services provided by Lear India to Lear entities situated abroad would fall under the category of OIDAR services. Answer: This question is not admitted in view of the provisions of Section 98(2) of the GST Act.
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