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TMI Blog2018 (12) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... , for service other than those listed in sub-sections (3) to (13) - In the instant case and from the perusal of transactions, except subsection (3) all other subsections are irrelevant for the purpose of determination of place of supply. The main contention of the applicant for non-applicability of section 13 (3) (a) of the IGST Act regarding determination of place of supply is that the goods which are required to be made physically available must be owned or made available only by the recipient of services. This line of argument in this respect is hard to accept and is not tenable. However from the plain reading of subsection (a) of subsection 3 of Section 13 of the IGST Act, we do not agree with the contention of the applicant that the goods that are required for rendering service by the supplier must be owned or made available only by the recipient of services. As per above clause, recipient of service who want to avail services has to make goods physically available on direct or indirect directions to the service provider and it does not matter who owned the goods. It is the cordial rule of interpretation that where the language used by the legislature is clear and unambi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2017 (IGST Act, 2017) 2. Or is it a zero rated export supply within the meaning of Section 2(23) r/w Section 2(6) of the IGST Act, 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02 FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS : Point 15 Statement of relevant facts having a bearing on questions raised Segoma Imagining Technologies India Pvt Ltd (hereinafter referred as Segoma India) is Indian private limited company set up under Indian Companies Act. Segoma India is 100% Subsidiary of Segoma Ltd (hereinafter referred as Segoma Israel) which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Condition 1: Based on above facts, Segoma India is located in India. Condition 2: Segoma Israel is located outside India. Condition 3: Based on above facts, diamonds are physically required to do photography service. Section of IGST Act, states that the place of supply of service supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services in order to provide the service shall be the location where the services are actually performed. Segoma India performs photography service in India. However, diamonds are not owned by Segoma Israel. As per section 13(3)(a) of IGST Act recipient of services should make available physically goods to service provider. However, in above transaction of photography, diamonds are made available by third party. Segoma Israel does not have role in receiving diamond. Segoma India issues memo of receipt of diamonds to customers of R2Net. Accordingly, section 13(3)(a) of IGST Act should not be applied in above transaction. Then as per section 13(2) of IGST Act, the place of supply of services except the services specified in sub-section (3) to (13) shall be the loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services Point 14 Questions on which advance ruling is required 3. Whether the supply of photography service is liable to SGST under the Maharashtra Goods and Service Tax Act, 2017 (MGST Act, 2017) and CGST under Central Goods and Service Tax Act, 2017 (CGST Act) or IGST under Integrated Goods and Service Tax Act, 2017 (IGST Act, 2017) 4. Or is it a zero rated export supply within the meaning of Section 2(23) r/w Section 2(6) Of the IGST Act, 2017? Point 15 Statement of relevant facts having a bearing on questions raised Segoma Imaging Technologies India Pvt. Ltd (hereinafter referred as Segoma India) is an Indian private limited company set up under Indian Companies Act. Segoma India is 100% Subsidiary of Segoma Ltd (hereinafter referred as Segoma Israel) which is based in Israel. Segoma Israel is subsidiary of R2Net which is based in US R2Net has appointed Segoma Israel for photography service. For all over the world, Segoma Israel has made agreement with Segoma India to do photography service in India. Segoma India provides Diamond Photography Services. R2Net has agreement with vendors for listing Diamonds online on website www.jamesallen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India ii. The place of supply of service is outside India iii. The payment for such service has been received by the supplier of ser-vice in convertible foreign exchange; and iv. 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 of IGST Act 1.3. Testing of conditions Condition 1: Based on above facts, Segoma India is located in India. Condition 2: Segoma Israel is located outside India. Condition 3: Based on above facts, diamonds are physically required to do photography service. Section 13(3)(a) of IGST Act, states that the place of supply of service supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services in order to provide the service shall be the location where the services are actually performed. Segoma India performs photography service in India. However, diamonds are not owned by Segoma Israel. As per section of IGST Act recipient of services should make available physically goods to service provider. However, in above transaction of photography, diamo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the services are actually performed, namely: - (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for Such repairs; On analysis of above, As mentioned earlier, Section 13 (3) of IGST Act, 2017: (a) Services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services (or his agent) in order to provide the services. The Diamond Vendors who are the owners of the diamonds make them available through delivery cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oker, 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; As per above definition Intermediary does not include a person who supplies the goods or services on his own account. Segoma India provides photography services to Segoma Israel and Segoma Israel has contract to provide service to R2Net hence Segoma India provides service on principal to principal basis to Segoma Israel on its own account. Segoma India works on Principal to Principal basis as they take the risk of loss of diamonds, damage to diamonds, theft of diamonds during there possession and in case of defective service it is a loss to them and their efforts would be wasted. Advance Ruling Related to Intermediary Services: 1. Provision of marketing support services, call centre services, payment processing etc does not amount to provision of intermediary services ( M/s. GoDaddy India Web Services Pvt. Ltd. Versus Commissioner of Service Tax, Delhi-IV. Ruling Application No. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he does not get the salary from NAC, US when he is offering services to NAC, India in that behalf, the benefits are mutually exclusive, at least so far as, they are concerned with the salary. The only obligation on NAC US is regarding the social securities which are not reimbursed by NAC, India to NAC US - merely because the social security of Mr. Sloan while he is in India is being taken care of by the NAC, US. The service of the individual with NAC, India cannot be viewed otherwise in view of the clear language of the provisions f law. There shall be no liability to pay service tax on the salary and the allowances payable by the applicant to the employee in terms of the dual employment agreement and such salary will not be eligible to levy the service tax as per the provisions of the Finance Act. Customer support and payment processing services provided by the service provider does not make the service provider an intermediary, as long as the Services are provided on own account. ( M/s. Universal Services India Pvt. Ltd. v. The Commissioner of Service Tax. Gurgaon, Ruling No.AAR/ST/07/2016 in Application No. AAR/44/ST/14/2014) = 2016 (5) TMI 750 - AUTHORITY FOR ADVANCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OFFICER dt.23.08.2018 The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required :- M/s. Segoma Imaging Technologies India Private Limited has given elaborative submission before Maharashtra Authority for Advance Ruling. He has asked ruling on whether the transaction is taxable under GST Acts or not. I wish to submit few points before Authority in relation to submission by dealer. A. Under heading Question of Law , the dealer has sought ruling from Authority that whether Transactions summarized in Brief Facts fall under Export of Services under Section 2(6), attracting Zero rated Tax under Section 16(1)(a) of IGST Act 2017. Section 2(6) of IGST Act states (6) export of services means the supply of any service when i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement between R2Net and Vendors, R2NET lists on the system ONLY those diamonds that are photographed . Segoma India currently catering to Indian vendor s f R2Net only . Vendors of R2Net give diamond on returnable basis to Segoma India Point 2.4 of Operating Policy of R2Net categorically describes - R2Net lists on the system ONLY those diamonds that are photographed with its proprietary Diamond Display Technology-Segoma It is to note that Segoma India does NOT have liberty to photograph and upload images of any other dealer. The diamonds are only those which are made available after privity of contract between Vendors and R2Net. Thus, it is cleared from above facts, that the Recipient has Constructive control over making diamonds physically available for Supply of Services and hence fall under Section 13(3) (a) of IGST Act 2017. D. Dealer has claimed to be a distinct person and out of ambit of Explanation 1 of Section 8 of IGST Act. The very section says: Explanation 1.-For the purposes of this Act, where person has, (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onds are made available by vendors of R2Net in India and not by any means by the R2Net. Segoma India provides service to Segoma Israel and hence Segoma Israel is the recipient and not R2Net. As per section 13(3)(a) of the IGST Act, 2017 The place of supply of the following services shall be the location where the services are actually performed, namely: (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting On behalf of the supplier of services in order to provide the Services. Therefore, as per above extract of section 13(3)(a) of the CGST Act, it is very clear that goods are not made available by R2Net.In fact, diamonds for photography are provided as per vendors convenience. There is no control of R2Net for providing the diamonds for photography to Segoma or R2 Net s proprietary firm. As per above clause, R2Net is not providing the diamonds nor it is recipient of the service or even have any control to provide the diamonds to Segoma India for photography. Also, it is very pertinent to note that Segoma India does not deliver photographs to Indian vendo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be in convertible foreign exchange. The said condition is correctly satisfied. The sample FIRC and invoices are submitted in the earlier submission on 31 st July 2018. According to the above analysis it may be concluded that Segoma India is providing services to Segoma Israel. Segoma Israel is the recipient of the services. The place of supply of services shall be the location of the recipient of service i.e. Israel and hence qualifies as export of services. 04. HEARING The case was taken up for Preliminary hearing on dt. 03.072018 with respect to admission or rejection of present application when Sh. Pathik Shah, C.A. alongwith Sh. Mukhtar Shaikh, Asstt. Manager appeared and made contentions for admission of application as made in their ARA. jurisdictional Officer, Sh. Manoj Ohekar, Dy. Commissioner of S.T. (E- 907) Nodal Division -5, Mumbai appeared and stated that they would be making written submissions in due course. The application was admitted and called for final hearing on 31.07.2018, Sh. Madhukar P. Khandekar, C.A. along with Sh. Rajesh Mehta, C.A. Sh. Mukhtar Shaikh, Asstt. Manager, Sh. Dharmesh Padnabhan, Vice President and Sh. Gaurav Shetty, Employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es all the provisions of section 2(6) of the IGST Act, to be treated as an export of services and to qualify as zero rated supply within the meaning of section of 16 of the IGST Act. A supply of service must satisfy simultaneously all conditions of section 2(6) of the IGST Act to be considered as export of service, which are reproduced as below:- Section 2(6) export of services means the supply of any service when,-- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) 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; There is no doubt that the supply of service in the present case satisfies conditions at (i) and (ii) of Section 2(6) of the IGST Act. However as stated above, to qualify as an export of services all the conditions must be satisfied simultaneously and therefore we now take upon ourselves to discuss whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the applicant that diamonds are not owned by Segoma Israel. He further submits that the recipient of services should make available physically goods to service provider and on the contrary in this case diamonds are made available by third party. Accordingly he submits that provision of section 13 (3) (a) of the IGST Act should not be applied in his case. The main contention of the applicant for non-applicability of section 13 (3) (a) of the IGST Act regarding determination of place of supply is that the goods which are required to be made physically available must be owned or made available only by the recipient of services. This line of argument in this respect is hard to accept and is not tenable. However from the plain reading of subsection (a) of subsection 3 of Section 13 of the IGST Act, we do not agree with the contention of the applicant that the goods that are required for rendering service by the supplier must be owned or made available only by the recipient of services. As per above clause, recipient of service who want to avail services has to make goods physically available on direct or indirect directions to the service provider and it does not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment for services in question must have been received in convertible foreign exchange. The condition (iv) reads as the payment for such service has been received by the supplier of services in convertible foreign exchange. The jurisdictional officer submits that the tax invoice shows that Segoma India has charged in Indian Rupees and has received consideration in foreign currency, figures of which do not match and come to the conclusion that condition (iv) is not satisfied. As per this condition the payment received by the supplier of services should be in convertible foreign exchange. Applicant has submitted sample FIRC (Foreign Inward Remittance Certificate) and invoices and as such we find that applicant has satisfied this condition. The condition (v) of the definition of export of services as per section 2(6) reads as: the supplier of service and the recipient of service are not merely establishment of a distinct person in accordance with Explanation 1 in section 8; As per this condition the supplier of service and recipient of service should be separate legal person and not mere an establishment of distinct person, In the present case, it is observed tha ..... 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