2020 (10) TMI 813 - AAAR - GST

Supply of services - local services or export of services - levy of GST on such services provided to the US Client directly - benefit of zero-rated supply - eligibility for refund of taxes already paid in the past if the refund is within the time limit provided under the GST Act. HELD THAT - Recipient is defined based on whether a Consideration is payable or otherwise. When a consideration is payable for the supply of goods or services, as is the case in hand, the person who is liable to pay that consideration is the Recipient of such Supply . The Statute is clear and unambiguous in defining the Recipient when a consideration is payable - Thus, consideration in relation to a supply should include any payment made for such supply whether by the recipient or any other person. This definition states about what is to be the value/consideration for supply on which tax is liable to be paid. This definition do not speak or clarify on Recipient of supply but merely encompasses the elements of Consideration for a supply. The statute is unambiguous in as much as it says, the person liable to pay the consideration for supply of services is the Recipient of such supply and Consideration is any payment made whether by the recipient or any other person for such supply. It is not disputed that the appellant is under contractual obligation to Doyen Systems to provide services through Doyen Systems for which Payment is agreed to be made by Doyen Systems to the appellant after verifying the invoice and the client time-sheet as in the Contract Agreement. Further as observed by the lower Authority the payment of Consideration to the appellant is entirely with the Doyen Systems and the appellant cannot claim consideration directly with the client of Doyen Systems or the client of Doyen Systems is not the person liable to pay the appellant for the services supplied by the appellant. Thus, it is clearly evident that the recipient of Services of the appellant is Doyen Systems.

Summary

Issues Involved:
1. Whether the services provided by the applicant shall be treated as local services or export of services.
2. Whether the applicant is liable to pay GST on such services provided to the US Client directly.
3. Whether the benefit of zero-rated supply can be availed by him for his services.
4. Whether he is eligible for a refund of taxes already paid in the past if the refund is within the time limit provided under the GST Act.

Issue-wise Detailed Analysis:

1. Whether the services provided by the applicant shall be treated as local services or export of services:
The appellant, engaged in IT software consulting services, entered into a contract with Doyen Systems to provide support services to a US client. The appellant argued that the services provided should be considered as export of services since they were ultimately consumed by the foreign client. The Original Authority ruled that the services provided to Doyen Systems are local services under CGST/TNGST Act, and the appellant is liable to pay relevant tax on such supply. The Appellate Authority upheld this ruling, stating that the recipient of the appellant's services is Doyen Systems, as they are the entity liable to pay the consideration.

2. Whether the applicant is liable to pay GST on such services provided to the US Client directly:
The appellant contended that since the services were consumed by the US client, they should not be subject to local GST. However, the Original Authority determined that the contract and payment obligations were with Doyen Systems, an Indian entity, making the services taxable under local GST laws. The Appellate Authority agreed, emphasizing that the appellant's contractual obligation was to Doyen Systems, which paid the consideration, making them the recipient of the services.

3. Whether the benefit of zero-rated supply can be availed by him for his services:
The appellant sought to avail the benefit of zero-rated supply for the services provided to the US client. The Original Authority did not address this question, stating it was outside their ambit as per Section 97(2) of the Act. The Appellate Authority did not find grounds to reconsider this aspect, as the primary determination was that the services were local supplies to Doyen Systems, not exports.

4. Whether he is eligible for a refund of taxes already paid in the past if the refund is within the time limit provided under the GST Act:
Similar to the zero-rated supply issue, the Original Authority did not address the refund eligibility question, citing it was beyond their jurisdiction. The Appellate Authority maintained this stance, focusing on the primary issue of whether the services were local or export, and concluded that since the services were local, the question of refund under the context of export did not arise.

Conclusion:
The Appellate Authority upheld the Original Authority's decision, concluding that the services provided by the appellant to Doyen Systems are local services under the CGST/TNGST Act, and the appellant is liable to pay the relevant tax on such supply. The appeal was disposed of accordingly, with no changes to the Original Authority's ruling.