2023 (8) TMI 1553 - AAR - GST

Seeking withdrawal of Advance Ruling Application - Supply under GST or not - legal cost apportionment by FWEL to the Applicant - requirement to pay tax under Reverse Charge Mechanism (RCM) - HELD THAT - The statement of facts supporting documents filed by the Applicant along with application submissions/Additional submissions made during personal hearing are carefully examined. The letter dated 26.07.2023 (sent by email on 26.07.2023) of the Applicant taken on record wherein they have stated that they have decided to withdraw the ARA application filed by them. As the Applicant has requested for withdrawal of their Advance Ruling Application the application is treated as withdrawn without going into the merits or detailed facts of the case.

Summary

Issues:
- Whether the legal cost apportionment amounts to a supply under GST?
- Whether the Applicant is required to pay tax under Reverse Charge Mechanism (RCM)?

Analysis:
1. Legal Cost Apportionment as Supply under GST:
- The Applicant, a Project Office, sought an Advance Ruling on legal cost apportionment by FWEL, UK. The Applicant argued that the activity does not constitute a supply under Section 7(1) of the CGST Act, as it lacks the commercial nature required for a service.
- The Applicant referenced various judgments and CBEC's Education Guide on service taxation to support their stance. They contended that the legal cost apportionment does not qualify as an import of service and does not meet the criteria for consideration under Section 2(31) of the CGST Act.
- They emphasized that the payment made by the Applicant to FWEL was not for any service provided, hence not subject to GST under RCM. They also cited judgments stating that sharing expenses does not amount to a service.

2. State Jurisdictional Authority's View:
- The State jurisdictional authority opined that legal cost apportionment by FWEL is taxable under RCM. However, no comments were received from the Centre jurisdictional Authority, indicating no pending proceedings against the Applicant in Centre.

3. Withdrawal of Advance Ruling Application:
- The Applicant, after multiple virtual hearings, decided to withdraw the Advance Ruling application. The Applicant's representatives appeared before the Authorities, citing precedents and cost-sharing arguments. They highlighted that the services were performed before 01.07.2017, exempting them from GST liability as per Section 142(11)(b) of the GST Act.
- The Applicant requested multiple adjournments for further hearings, and ultimately, in a letter dated 26.07.2023, decided to withdraw the application.

4. Ruling:
- The Authority, considering the Applicant's withdrawal request, disposed of the ARA Application without delving into the case's merits or detailed facts. The ruling states that the ARA Application seeking Advance Ruling is treated as withdrawn per the Applicant's request.

This comprehensive analysis covers the legal arguments, jurisdictional views, Applicant's submissions, and the final ruling based on the withdrawal of the Advance Ruling application.