2024 (2) TMI 230 - AAR - GST

Scope of Advance Ruling - Levy of GST - revenue sharing scenarios between joint bidders/partners - privity of contract between TMC and M/s Vistar AEC Consultants LLP - HELD THAT - It is observed from the agreement of 'Contract for Services' between M/s Grant Thornton Bharat LLP and M/s Vistar AEC Consultants LLP, that the overall project fee awarded is shared between GTBL and VACL in the ratio 34.38 65.62. However, VACL has raised tax invoice to GTBL for providing services to them. Thus, the question of revenue sharing does not arise when tax invoice is raised. Hence, Advance ruling cannot be given on assumed scenarios in the absence of relevant documents.

Summary

Issues:
The judgment involves determining the applicability of GST rate for revenue sharing scenarios between joint bidders/partners, consideration of GST rate applicable to the client, and the exemption of GST for all partners involved.

Applicability of GST Rate for Revenue Sharing Scenarios:
The applicant, a Limited Liability Partnership providing architectural and structural design consultancy services, sought an advance ruling on the GST rate for revenue sharing scenarios between joint bidders/partners. The applicant had secured a design consultancy project jointly with another partner, M/s. Grant Thornton Bharat LLP, for Tiruchirappalli City Corporation. However, it was noted that the applicant raised tax invoices to the partner, GTBL, indicating no direct contract with the client. Therefore, the question of revenue sharing did not arise, and the ruling could not be given without relevant documents.

Consideration of GST Rate Applicable to the Client:
The applicant believed that the GST rate applicable on revenue sharing should be the same as that applicable to the client. However, based on the agreement between the partners and the client, it was found that the applicant provided services to the partner, GTBL, and not directly to the client. Therefore, the applicant cannot consider the GST rate as applicable to the client.

Exemption of GST for All Partners:
The applicant also inquired about the exemption of GST for all partners involved. It was clarified that the exemption of GST is not applicable to the applicant, considering the nature of the services provided and the contractual relationships outlined in the agreements.

Conclusion:
In conclusion, the Authority for Advance Ruling, Karnataka, ruled that advance ruling cannot be provided based on assumed scenarios without relevant documents. The applicant cannot consider the GST rate as applicable to the client, and the exemption of GST does not apply to the applicant based on the provided information.