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2020 (7) TMI 346 - AAR - GSTExport of services or not - Intermediary service or not - marketing and consultancy services supplied by the applicant - HELD THAT - It is evident from prima fade understanding of the issue that supplier of service i.e., the applicant is located in India and the recipient of the services i.e., Grace Davison (Singapore) is located outside India. But the third parameter i.e., the place of supply of service being outside India is mil applicable in the instant case basing on the facts as submitted by the applicant. The applicant renders its marketing and consultancy services to its overseas client and carries out all the functions in India as necessitated by its client. The mere fact that the payment has been received in convertible foreign exchange by the applicant will not qualify the transaction of the applicant as export of services. The applicant in the present case by providing marketing and consultancy services, facilitates the supply of goods i.e., fluid cracking catalysts and its additives from Grace Davison(Singapore) to it's clients in the Territory i.e, India. Besides, the condition that transaction not being done on his own account makes the applicant rightly fit into the definition of intermediary in the instant case - In the instant case the intermediary services are provided to the recipient located outside India and the Inter-state provisions as contained under Section 7 (5) (c) shall be applicable and hence IGST is payable under such transaction.
Issues involved:
1. Classification of services as export of service or intermediary services under GST. Analysis: The case involved an application filed by a company registered under the Goods & Services Tax seeking clarification on whether the marketing and consultancy services provided by them could be considered as export of service. The applicant acted as an authorized non-exclusive consultant for a foreign company, facilitating the sale of products in India. The applicant claimed that they only provided marketing consultancy services in India on behalf of the foreign company and received payment in foreign currency through inward remittance. The key question raised before the Authority for Advance Rulings was whether these services could be classified as export of service. The Authority examined the nature of the services provided by the applicant to its overseas client. While the supplier of service was located in India and the recipient of service was outside India, the place of supply of service was within India based on the functions carried out by the applicant. As per the definition of export of services under Section 2(6) of the IGST Act 2017, the transaction did not qualify as export of services. The Authority opined that the services provided by the applicant could be classified as intermediary services under the IGST Act, as the applicant facilitated the supply of goods between the foreign company and clients in India without conducting the transaction on their own account. Furthermore, the Authority referred to Section 13(8) of the IGST Act, which specifies that the place of supply of intermediary services is the location of the supplier of services. Since the applicant was the supplier of intermediary services, the location of the applicant was considered as the place of supply. Therefore, the taxability of the services fell under Section 7(5)(c) of the IGST Act, making it an inter-State supply subject to IGST. Consequently, the ruling stated that the services provided by the applicant were not classified as export of service but as intermediary services, attracting IGST. In conclusion, the Authority clarified that the marketing and consultancy services provided by the applicant were deemed as intermediary services rather than export of service, as per the provisions of the IGST Act. Hence, the services were subject to IGST under the applicable tax provisions.
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