2021 (5) TMI 813 - AAR - GST

Supply of services or deemed supply - Liaison office - applicant connects businesses in India with business partners in Dubai - intermediary - non-profit organization - requirement to obtain registration or not - levy of GST - HELD THAT - While on one hand applicant has submitted that it is not undertaking any supply, on the other hand applicant accepts that it connects businesses in India with business partners in Dubai, which is nothing but supply of services. Thus the applicant acts as a conduit between some business partners in Dubai and certain businesses in India. It therefore appears that the applicant is acting as an intermediary in the subject case. Intermediary - HELD THAT - The applicant is satisfying all the conditions of an intermediary and there are no hesitation in holding that, the applicant is an intermediary. As per the provisions of Section 13 (8) of the IGST Act, 2017, we find that the place of supply in subject case of the applicant as an intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the State of Maharashtra, India. Non-profit organization - HELD THAT - From the website of Dubai Chamber, UAE, it is seen that they are providing various services for which fees are charged. Thus it is clear that the applicant s Head Office appears to be a profit making organization, in which case the applicant cannot be considered as a non-profit making organization. Supply or not - HELD THAT - There is definitely, a supply of services by the applicant to various businesses in India and Dubai and such supply is done by the applicant as an intermediary - activities under taken by the DCCI is nothing but Business . The terms Supply and Business are defined under GST Act, in an inclusive manner and have wide connotations. Hence the reply filed by the applicant to cross objection is incorrect. Activities undertaken by the applicant are covered by the scope of word Commerce , Business and also covered under the scope of Supply . The applicant connects businesses in India with business partners in Dubai. In other words applicant is providing services, to various business in India and Dubai. Hence, the facts of both the cited cases are different from the facts of the present case - the applicant is receiving consideration from its Head Office in excess of expenses incurred by it, we agree with the jurisdictional officer s view that, the applicant cannot be treated as a non-profit organization. Also, the application is providing intermediary services for which it is liable to pay GST.

Summary

Issues Involved:
1. Whether activities performed by DCCI LO shall be treated as supply under GST law?
2. Whether DCCI LO is required to obtain GST registration?
3. Whether DCCI LO is liable to pay GST?

Issue-wise Detailed Analysis:

1. Whether activities performed by DCCI LO shall be treated as supply under GST law?
The applicant, Dubai Chamber of Commerce and Industry - Liaison Office (DCCI LO), undertakes liaison/representation activities in India, such as connecting businesses in India with business partners in Dubai. The applicant argued that these activities do not constitute a supply under GST law as they do not involve consideration and are performed on a cost-to-cost basis. However, the Authority examined the definition of "intermediary" under Section 2(13) of the IGST Act, which includes any person who arranges or facilitates the supply of goods or services between two or more persons. The Authority concluded that DCCI LO, by connecting businesses in India with those in Dubai, acts as an intermediary. Therefore, the activities performed by DCCI LO are treated as supply under GST law.

2. Whether DCCI LO is required to obtain GST registration?
The Authority noted that the applicant receives payments from its head office, DCCI UAE, which are considered as consideration under Section 15(2)(c) of the CGST Act. Despite the applicant's claim of being a non-profit organization, the Authority found that DCCI LO's activities fall under the definition of "business" as per Section 2(17)(a) of the CGST Act. Additionally, the applicant's financial records indicated surplus amounts, suggesting that it is not operating solely on a cost-to-cost basis. Consequently, the Authority determined that DCCI LO is required to obtain GST registration.

3. Whether DCCI LO is liable to pay GST?
Given that DCCI LO's activities are treated as supply and it is required to obtain GST registration, the Authority further concluded that DCCI LO is liable to pay GST. The payments received from DCCI UAE, even if considered reimbursements, are treated as consideration for the supply of services. The Authority emphasized that the applicant's activities, including connecting businesses and representing DCCI UAE in various events, constitute taxable supplies under GST law.

Conclusion:
The Authority for Advance Ruling, Maharashtra, ruled affirmatively on all three questions: the activities performed by DCCI LO are treated as supply under GST law, DCCI LO is required to obtain GST registration, and DCCI LO is liable to pay GST. The decision was based on the interpretation of relevant provisions of the CGST Act and the nature of the applicant's activities as an intermediary facilitating business connections between India and Dubai.