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TMI Blog2018 (11) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... y of goods or services or both between the overseas client and customers of the overseas client, and therefore applicant is clearly covered and falls in the definition of an intermediary as defined under the IGST Act. As the applicant is held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant - the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the state of Maharashtra, India. To qualify transaction of supply of services as export of services that transaction has to satisfy all five ingredients of the definition of export of services simultaneously. In the present case, the condition at (iii) of the above definition is not satisfied and hence without examining and getting into the contention of the jurisdictional officer with regards to condition at (v) of the said definition as to distinct person which would require more specific and detailed examination and verification on their part to get correct factual position in this regard, the services proposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servglobal Private Limited (hereinafter referred to as 'Vserv'), is an Indian Company having its office at Mumbai. The company is incorporated to provide back office support services to overseas companies (hereinafter referred to as 'Clients'). Clients are engaged in Trading of Chemicals and other products in International Trade. Vserv will come into picture after finalization of Purchase / Sale order by a Client. Vserv will undertake following activities for and on behalf of Clients. a) Get SDF (Sales Detail Form) & PDF (Purchase Detail Form) from concerned party b) Generate order no in VOSS c) create PO (Purchase Order) & SC (Sales Contract) in VOSS d) Send SC (Sales Contract) & PI (Proforma Invoice) to customer & get Sl (Shipping Instructions) as e) Send PO (Purchase Order) to supplier & Seek PI (Proforma Invoice) & Share SI (Shipping Instructions) f) Liaise with supplier for Cargo Readiness g) Liaise with inspection authorities if pre-shipment inspection is needed h) Inform Customer on tentative schedule i) Process payment request in VOSS j) send payment request to Client. k) provide forwarder/ carrier nomination to supplier if FOB (Free on Board) l) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. 3. A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: a) He may supply goods or services or both under bond or Letter of Undertaking, subject to such safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. " As per the above stated legal provisions Export of Services is a zero rated supply. The phrase Export of Service' is defined in Section 2(6) Of the Act, ibid and read as under: "(6) "export of services" means the supply of any service when, - (i) the supplier of service is located in India; (ii) the recipient of servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment; (c) Where a supply is received at more than one establishment, whether the place of business fixed establishment, the location of the establishment most directly concerned with the receipt the supply; and (d) in absence of such places, the location of the usual place of residence of the recipient;" 8 (a). The applicant is providing services to the overseas offices of recipient of services and such services are used by recipients for their business conducted by such overseas offices. The said overseas offices of recipients are covered under the definition of 'fixed establishment' as contained in section 2(50) of the central Goods & services tax act, 2017, and therefore, the said second condition is also fulfilled. The definition of 'fixed establishment is reproduced here for ready reference. "(50) "fixed establishment" means a place (other than the registered place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;" 9. The place of supply of service id outside India - As per sub-section (2) of section 13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther establishment being a business vertical registered within that State or Union territory, Then such establishments shall be treated as establishments of distinct persons. 11 (a). As already submitted the supplier of service and recipient of services are separate incorporated companies and therefore they are not merely establishment of distinct person in terms of aforesaid statutory provisions. Thus the said condition is also satisfied. From the above discussions it is clear that the services proposed to be rendered by the applicant satisfy all the condition of "Export of Services" and therefore, covered under the definition of "Zero Rated Supply" Further Submissions made on 02.07.2018- 1, That, applicant M/S Vservglobal Private Limited, is highly obliged to the Hon'ble Authority for patient Personal Hearing on 26th June 2018 and allowing to file Written Submissions within a weeks' time. During Personal hearing a question was posed as to how the services rendered / proposed to be rendered by applicant is not covered under the definition of 'lntermediary Services' as defined under Section 1 3) of the Integrated Goods & Service Tax, 2017. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting' which is its Principle Supply. If these services also facilitate supply of goods then it is only an incidental supply to the Principle Supply. As already submitted, the applicant would come into picture only after finalization of Purchase / Sale deals by the clients. They said 'Business Support Services' would be provided by applicant to its client would be on Principle to Principle basis. Therefore, the instant case is covered by exclusion clause in definition of 'Intermediary' 5. It is submitted that the term 'Intermediary' was also defined in aforesaid definition is exactly same, as it was in Service Tax Regime. In Service Tax the term was defined in Rule of the Place of Provision Rules, 2012 which read as under. (f) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account; " 6. From the above, it is clear that the definition of 'intermediary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a single package. Further, supporting the business of GoDaddy US in India is the main service and processing payments and oversight of services of third party Call Centers are ancillary and incidental to the provision of main service, i.e., business support service. Further, applicant would provide said services as a package and the payment for the entire package would he a consolidated lump sum payment. Applicant submits that in view of all these indicators, service provided by them to GoDaddy US is a bundle of services, which is bundled in normal course of business. This point has not been controverted by the Revenue. We agree with the submissions of the applicant that proposed services are a bundle of services, bundled in normal course of business and not intermediary service. 19. It observed that business support services are proposed to be provided by the applicant to GoDaddy US on principal to principal basis. It is the main service. Further, applicant is not concerned in respect of services provided by GoDaddy US to Indian Customers, which relates to domain name registration, transfer services, web hosting services, designing services, etc. In case, applicant was providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties involved in respect of that transaction and for other parties, the ruling will be of persuasive nature. The Authority, however, has clarified that this is not to say that a principle of law laid down in a case will not be followed in future. This decision of the Authority in Cyril Eugene Pereira, In re. (Supra) has been taken note of by this Court in Union of India & Anr. v. Azadi Bachao Andolan Anr. [(2003) 263 ITR 706 at 742] to hold that the advance ruling of the Authority is binding on the applicant, in respect of the transaction in relation to which the ruling had been sought and, on the Commissioner, and the income-tax authorities subordinate to him and has persuasive value in respect of other parties. However, it has also been rightly held by the Authority itself that this does not mean that a principle of law laid down in a case will not be followed in future. 12 From the above, it is clear that the applicant cannot be termed as 'intermediary' and therefore Sub-section (8) of Section 13 Integrated Goods & Service Tax, 2017 have no application. In the instant case, the services being provided is not specified under any of the Sub-section from (3) to (13) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought for Advance Ruling before Hon. Advance Ruling Authority, place of supply is not covered under the above (a) to (g), hence, my office argument is the application submitted by the applicant is not maintainable. In this regard, if Advance Ruling Authority has accepted the application and treated is maintainable then my alternative submission is as under. The dealer has stated that, he has exported the services, and claiming that, the said services are Zero rated supply u/ s 16 of IGST Act 2017. As per definition u/s 2 (23) of IGST Act 2017 ' Zero Rated Supply', means a supply of any goods or Services or both in terms of section 16 of IGST Act 2017. As per section 16 of IGST Act "zero rated supply" means any of the following supplies of goods or services or both, namely: - Export of goods or services or both; or Supply of goods or services or both to a Special Economic Zone developer or a special Economic Zone unit. Means any supply of goods or service which is exported outside of India or supplied to any SEZ developer or any SEZ unit will be treated as zero rated supply. We are here restricted up to export of services, to qualify zero rated supply Export of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecipient is in India. 1. If the location of supplier of service and the recipient is in India then the place of supply of serviced shall be determined under section 12 of IGST act. 2. when the place of supply of service cannot be determination under section 12(3) to 12(14) i.e. when there is no special provision specified for determination of place of supply then place of supply determined in section 12(2) which is as follows: a. where the services made to registered person - location of such recipient. b. where the services made to person other than registered person - i. If address of recipient exists in records of supplier - such address of the recipient. ii. In any other case - Location of the supplier. Location of the Recipient of Services - Section 2 (14) 1. Where a supply is receives at a of business for which the registration has been obtained, the location of such place of business. 2. Where a suppIy is received at a lace other than the lace of business for which registration has been obtained (a fixed establishment elsewhere). the location of such fixed establishment. 3. Where a supply is received at more than one establishment whether the lace of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India for M/S Vikhudha Overseas Corporation Limited. It means all services provided to M/S Vikudha India Trading Limited by the Applicant. It means location of recipient of service is in India, at 201, Dhantak Plaza, Opp Waman Center Makwana Road, Marol, Andheri (E), and Mumbai. It is also pertinent to note that, The Applicant of this ARA M/S Vservglobal Pvt Ltd, is private Limited company situated at 201, Dhantak Plaza, Opp. Waman Centre, Makwana Road Andheri (E), and Mumbai-400059 Another condition of location of the recipient of service is located outside India, and the place of supply of service is outside India is not fulfilled. Only mere agreement by foreign company with Indian is not suffice to determine Export of services. It is also seen from the bank account of the M/S Vservglobal Pvt Ltd, that payment for such service has not been received by the supplier of service in convertible foreign exchange. The last condition is that the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8, is also not satisfied. Section 8 of IGST Act is reproduced for ready reference. IGST Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provision, M/S Vikudha Overseas corporation Limited, and M/S Vikhudha India Limited, and M/S Vservglobal Pvt Ltd, are not a distinct person, for this provision, thus there cannot be export of service to own branch outside India. Form the above aforesaid fact, and related provision under the statute, the above transaction is not qualify export of services, hence not qualified under "Zero rated supply", it is Supply of Services to be treated as Intra-state. If we see the nature and scope of work, the all nature is office work, or we can call it back office work. Co ordination with buyer and sellers, and other parties for execution of purchase and sale contracts entered in to by M/S Vikudha Overseas Corporation Limited. Explanation 1.-For the purposes of this Act, where a person has,- (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed to hire the party B to provide the said services and the Party B agreed to render the same in accordance with the provision of this contract. 3. article-1 :-Object of contract:- This service agreement aims to establish terms and conditions under which the party B commits to provide for party A for the services of back office administrative and accounting support. The nature and details of services to be provided to the party A by the party B throughout this are specified in Article 2 of this contract. Article 2: Nature and scope of work: The Party B will coordinate with buyer, seller and Other necessary parties for execution of purchase and sale contracts entered into by the party A. The party B will also maintain accounting of all these transactions. Party A will provide access to its software "VOSS" to the Party B for rendering the agreed services. The major service activities to be undertaken by the Party B for and on behalf of party A are mentioned at [( a ) to (x) of the facts of the case at para 2 of this agreement as above. Article 3: Obligation of parties: * The party B commits itself carrying out hereby services in accordance with the instruction of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices contended by the applicant. During the course of final hearing held on 26.06.2018 and having regards to the facts of the case applicant was called on to submit his written contention specifically insisting that how they are not covered in the definition of ' intermediary' as defined u/s.2(26) of the IGST Act. In response applicant made further submission dated 02.07.2018 which is already reproduced above. We carefully have considered rival submissions and also scrutinized in detail different clauses of service agreement, Invoices and the bank statement. Admittedly appellant is to provide back office support services, payroll processing, to maintain records of employee to overseas companies i.e. clients and after finalization of purchase / sale between the client and its customer. As per the legal understanding of the applicant aforesaid services proposed to be rendered qualify as 'Zero rated supply' in term of sec.16 of the IGST Act. In order to have seal of approval on the issue, the present application is made and applicant has requested this authority to decide the issue. In order to examine the issue at hand the provisions contained in sec.16 of the IGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in the act. Section 2(13) of the IGST Act: "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; In the context of definition of 'Intermediary' as mentioned above, we now examine the service agreement as a whole to ascertain whether the applicant is an Intermediary or not. This is necessary because the provisions of place of supply which decide the nature of supply of a transaction as to Intrastate supply, interstate supply or export supply. For a supply to be called as 'export of services' one of the condition is that the place of supply shall be outside India. The important clauses Of the service agreements are as below: * Applicant commits to client to provide for services of back office administrative and accounting support. * Applicant will coordinate with buyers, sellers and other necessary parties for execution of purchase and sell contract entered into by the clients. * Clients w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant. In the instant case and as per applicants own admission of fact that applicant is supplier of Services, which is a corporate entity incorporated in India and having is registered office in Mumbai. We find that the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the state of Maharashtra, India. 'To qualify transaction of supply of services as export of services that transaction has to satisfy all five ingredients of the definition of export of services simultaneously. In the present case we find that the condition at (iii) of the above definition is not satisfied and hence without examining and getting into the contention of the jurisdictional officer with regards to condition at (v) of the said definition as to distinct person which would require more specific and detailed examination and verification on their part to get correct factual position in this regard, we hold that the services proposed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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