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2021 (11) TMI 290 - AAR - GSTLevy of tax - services procured by the applicant from Beacon US in respect of the referral of the FIS client - import of service - person liable to tax in respect of the services rendered by Beacon US to applicant - whether the place of supply of service is in India? - Intermediary services or not - HELD THAT - The applicant herein is a subsidiary of M/s Workplace Options LLC (USA), who entered into a global arrangement with M/s Beacon Health Options Inc. -USA (formerly known as Value Options Inc.-USA), which is a company established in USA and does not have any office or fixed establishment in India, for the purpose of mutual referral of clients and work arrangements to Workplace Options Group Companies across the Globe. M/s Beacon, USA, as part of global arrangement identified a customer M/s FIS Global Solutions India Private Limited ( FIS India ) and referred the said client to the applicant, for a commission named as referral fee based on a formula, agreed by both the parties, which is equivalent to a percentage of the price charged by the applicant to FIS India. Beacon raised the invoice directly to the applicant for the referral fee. In terms of Section 5 of IGST Act 2017, IGST is levied on all inter-state supplies of goods or services, and in terms of Section 2 (21) of Act, ibid, supply shall have the same meaning as assigned to in Section 7 of the CGST Act 2017. The applicant, with regard to taxability of the impugned service, admitted that the said service amounts to supply in terms of Section 7 of the CGST Act 2017. It is also admitted by the applicant that the impugned services are imported into India and shall be treated to be an inter-state supply in terms of Section 7(4) of the IGST Act 2017. Place of supply of service - HELD THAT - The issue whether the impugned services qualify to be import of services or not it is required to determine the place of supply of the impugned service, which is beyond the jurisdiction of this authority in terms of Section 97(2) of the CGST Act 2017. The application is disposed off without any ruling as the determination of place of supply is beyond the jurisdiction of this authority.
Issues Involved:
1. Taxability of services procured by the applicant from Beacon US under the IGST Act, 2017. 2. Qualification of the said service as an import of service under Section 2(11) of the IGST Act, 2017. 3. Liability to pay tax for the services rendered by Beacon US to the applicant. Detailed Analysis: Issue 1: Taxability of Services Procured by the Applicant from Beacon US The applicant, a company engaged in providing human resource consulting services, sought an advance ruling on whether the referral services procured from Beacon US are liable to tax under the IGST Act, 2017. The applicant contended that the referral services provided by Beacon US, which involved identifying and referring a client (FIS India) to the applicant, should be classified as 'intermediary services' under Section 2(13) of the IGST Act. The applicant argued that since Beacon US facilitated the supply of services between the applicant and FIS India, it acted as an intermediary. According to Section 13(8)(b) of the IGST Act, the place of supply for intermediary services is the location of the supplier, which in this case is outside India. Consequently, the applicant claimed that the services do not qualify as an import of service and are not taxable in India. Issue 2: Qualification as an Import of Service To determine if the services qualify as an import of service, the criteria under Section 2(11) of the IGST Act must be met: - The supplier of service is located outside India. - The recipient of service is located in India. - The place of supply of service is in India. The applicant admitted that the supplier (Beacon US) is located outside India and the recipient (the applicant) is located in India. However, the critical point was determining the place of supply. The applicant argued that the place of supply, being the location of the intermediary (Beacon US), is outside India, thus not fulfilling the condition for 'import of services.' Issue 3: Liability to Pay Tax The applicant sought clarification on who would be liable to pay tax if the services were deemed taxable. The ruling authority examined the provisions under Section 5 of the IGST Act, which levies IGST on all inter-state supplies of goods or services. Since the applicant admitted that the services are imported into India and treated as inter-state supply under Section 7(4) of the IGST Act, the determination of the place of supply became crucial. However, the authority refrained from ruling on this matter as it was beyond their jurisdiction under Section 97(2) of the CGST Act, 2017. Ruling: The application was disposed of without any ruling on the determination of the place of supply, as it was beyond the jurisdiction of the authority.
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