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2019 (7) TMI 1475 - AAAR - GSTClassification of supply - intermediary services or not - composite supply - services provided by the Appellant to Sabre APAC, their parent company located in Singapore - composite supply or not wherein the principal supply is the supply of intermediary service, or otherwise - HELD THAT - It is amply evident that all the marketing and promotional activities, viz.- advertising, PR, Sponsorships, any special events and trade shows etc. are solely aimed to create the customer base for Sabre APAC, the Appellant s parent company, to augment its business in India, by way of identifying the potential subscribers of Sabre System and thereby enhancing business opportunities for Sabre APAC, the Appellant s parent company. The prime responsibility of the Appellant is to identify the potential subscribers viz.-travel agents across the country, for the Sabre System, wherein the sales team of the Appellant approaches the potential subscribers to explain the remarkable features, functionality and specialty of the Sabre System and based upon the response from the potential subscribers, the Appellant initiates the subscription process of the Sabre System for the potential customers by placing a request for subscription in respect of the Sabre System, in the favor of potential subscribers in the website, called Subscriber Communication Management System (SCMS), maintained by Sabre APAC - it is very much clear that by carrying out all the activities as per the said Agreement, Appellant is arranging for the supply of services, which, in the instant case, is online information and database access and retrieval services (OIDAR Services) provided by Sabre APAC, by way of identifying the potential subscribers. The Appellant is facilitating the supply of the online information and database access and retrieval services (OIDAR Services), which is provided by Sabre APAC, their parent company to the potential subscribers, which are eventually identified by the Appellant as described and submitted above by the Appellant themselves, as the activities of installation of interfaces to the CRS Software, consultancy, assistance, provision of information services, etc., entrusted upon the Appellant by Sabre APAC, are the essential and indispensable elements of the above mentioned OIDAR Services, which are actually performed by the Appellant on behalf of Sabre APAC, their parent company - it is abundantly clear that the Appellant is arranging as well as facilitating the supply of services between Sabre APAC and the potential subscribers. Intermediary services or not? - HELD THAT - The Appellant play a key role in the supply of the OIDAR Services to the subscribers of the Sabre System, on behalf of another person, in the present case Sabre APAC and thus acting as an agent in the present case. If we take out the role played by the Appellant in this entire transactional chain, there would be no supply of any services at all, as there would not be any recipient of the OIDAR services in India, for it is the Appellant who identifies and thus arranges for the recipient of this OIDAR Services provided by Sabre APAC - it is established beyond doubt that the activities undertaken by the Appellant are primarily in the nature of those of the intermediary. Place of supply of services - export of services or not - HELD THAT - We do not have jurisdiction to decide whether any particular supply of service is export or otherwise. However, the Advance Ruling Authority has commented on the place of the supply of service, transcending their jurisdiction - no ruling passed on this issue.
Issues Involved
1. Whether the services provided by the Appellant qualify as intermediary services under the GST Act. 2. Determination of the place of supply for the services provided by the Appellant. 3. Whether the services provided by the Appellant qualify as export of services under the GST Act. 4. Classification of the services provided by the Appellant as a composite supply. Detailed Analysis 1. Intermediary Services The Appellant argued that their services should not be classified as intermediary services under Section 2(13) of the IGST Act. They contended that their activities were performed on a principal-to-principal basis, and they did not facilitate the supply of goods or services between two parties. However, the judgment concluded that the Appellant's activities, such as identifying potential subscribers, initiating the subscription process, and providing marketing support services, facilitated the supply of OIDAR services provided by Sabre APAC to the subscribers. Thus, the Appellant was acting as an intermediary. 2. Place of Supply The Appellant contended that the place of supply for their services should be outside India, as the recipient of the services (Sabre APAC) was located in Singapore. However, the judgment noted that determining the place of supply falls outside the jurisdiction of the Advance Ruling Authority as per Section 97(2) of the CGST Act. Therefore, the place of supply was not conclusively determined in this judgment. 3. Export of Services The Appellant argued that their services should qualify as export of services under Section 2(6) of the IGST Act, which would make them zero-rated supplies. They claimed that they met all the conditions for export of services, including the location of the supplier and recipient, receipt of payment in convertible foreign exchange, and the principal-to-principal nature of the agreement. However, the judgment could not address this issue due to the lack of jurisdiction to determine the place of supply, which is a prerequisite for deciding whether a service qualifies as an export. 4. Composite Supply The Appellant argued that their services should be classified as a composite supply under Section 2(30) of the CGST Act, with the principal supply being marketing and promotion services. The judgment agreed that the services provided by the Appellant could be considered a composite supply, but held that the principal supply was intermediary services. All other activities such as advertising, PR, and promotional activities were deemed ancillary or incidental to the principal intermediary service. Conclusion The judgment concluded that the Appellant's services constituted a composite supply, with intermediary services being the principal supply. The determination of whether these services qualify as export of services was not addressed due to jurisdictional limitations.
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