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2023 (6) TMI 775 - AAAR - GSTLevy of IGST - amount paid to IVL Sweden against the receipt of support services in the form of consultancy - reverse charge mechanism - Exemption to service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient - place of supply - HELD THAT - On perusal of the subject contract entered by the Appellant, IVL Sweden and MCGM. it is conspicuous that Appellant, i.e., IVL India, is being termed as the Consultant of the subject projects and IVL Sweden has been termed as the Parent Company. Further, the said contract also provides that the Commissioner would pay to the consultant, i.e. IVL India, the contract fee amount, in consideration for the work carried out by them. Thus, in view of the above, it is adequately clear that IVL India is providing services to MCGM, and accordingly raising invoices on MCGM for receiving the payment agreed upon in the subject contract. It is further found that IVL Sweden is acting as a guarantor in this entire arrangement which is evident from the stipulations/covenants provided in the documents, such as Bank Guarantee, Parent Company Guarantee/Undertaking which clearly indicate that the entire PMC work is being carried out by the Appellant, i.e., IVL India. The same is also evident by the term PMC (Project Management Consultancy) used for the Appellant in Parent company Guarantee/undertaking. Further, it is observed that though as per the Agreement entered by the Appellant and IVL Sweden with MCGM, and the Parent company Guarantee/undertaking entered with MCGM. the Appellant has been appointed as the PMC (Project Management Consultant) while IVL Sweden as the Guarantor for the completion of the subject projects, there is no doubt about the fact that the entire project management work is carried out by the Appellant with the help of IVL Sweden which has got all the expertise, work experience and resources to manage such projects. Place of supply - HELD THAT - Since in this case the recipient of services is located in India and supplier of the services, namely, IVL Sweden, is located abroad, therefore, Section 13 of IGST Act, 2017 will be applicable to determine the place of supply. On perusal of the aforesaid provision, it is observed that the default provisions of Section 13(2) will cover the present case as the same does not fit under any of the remaining provisions ranging from sub-section (3) to-sub-section (13) of section 13 of the IGST Act, 2017 - it is observed that the place of supply of services in the present case will be the location of recipient of services, i.e., India. Whether the support services received by the Appellant being located in India and supplier of services, namely, IVL Sweden, located outside India, can be construed as import of services? - HELD THAT - It is clear that the said support services received by the Appellant from IVL Sweden will come under the ambit of import of services as the said services fulfill all the criteria of the import of services - Once it has been established that service under question is import of services, the same will be liable for payment of IGST at the hands of the recipient of services in terms entry 1 of the Notification No. 10/2017-I.T. (Rate) dated 28.06.2017. Thus, it is held that the transfer of monetary proceeds by the Applicant to IVL Sweden, will be liable for payment of Integrated Goods and Service Tax under reverse charge mechanism under Entry No. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. Thus, the appeal filed by the Appellant is hereby rejected.
Issues Involved:
1. Determination of service provider in the context of the transactions under question. 2. Applicability of Integrated Goods and Service Tax (IGST) under reverse charge mechanism. 3. Examination of place of supply for the services in question. 4. Evaluation of the import of services criteria. 5. Applicability of case laws cited by the appellant. Summary: Issue 1: Determination of Service Provider The Appellate Authority examined the contract and concluded that IVL India is the service provider to MCGM, raising invoices and receiving payments for the Project Management Consultancy (PMC) services. IVL Sweden acts as a guarantor, providing expertise and resources essential for the project. The Authority found that IVL India avails support services from IVL Sweden to execute the PMC work, based on the credentials and experience of IVL Sweden. Issue 2: Applicability of IGST under Reverse Charge Mechanism The Authority upheld the ruling that the transfer of monetary proceeds by IVL India to IVL Sweden is liable for IGST under the reverse charge mechanism as per Entry No. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. The services provided by IVL Sweden to IVL India qualify as import of services, making IVL India liable for IGST. Issue 3: Examination of Place of Supply The place of supply for the services received by IVL India from IVL Sweden was determined to be India, as per Section 13(2) of the IGST Act, 2017. This section states that the place of supply of services shall be the location of the recipient, which in this case is IVL India located in India. Issue 4: Evaluation of Import of Services Criteria The services provided by IVL Sweden to IVL India met all criteria for import of services under Section 2(11) of the IGST Act, 2017: - The supplier of service (IVL Sweden) is located outside India. - The recipient of service (IVL India) is located in India. - The place of supply of service is in India. Issue 5: Applicability of Case Laws The Authority reviewed the case laws cited by the appellant, including B.G. Exploration & Production India Ltd. vs. Commissioner of CGST & CEX., Navi Mumbai, and others. It concluded that the facts of these cases were distinguishable from the current case, and thus, the case laws were not applicable. Order: The Appellate Authority upheld the MAAR Order No. GST-ARA-50/2020-21/B-108 dated 01.12.2022, confirming that the transfer of monetary proceeds by IVL India to IVL Sweden is liable for IGST under the reverse charge mechanism. The appeal filed by the appellant was rejected.
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