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TMI Blog2019 (10) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 2(13) of the Integrated Goods and Services Tax Act, 2017? b) Whether the Post- Sales Technical Support Services provided by the applicant would be classified as Information Technology Support Services falling under HSN Code 998313? The applicant states that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions, and thus, 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 KGST Act. For the purposes of this application, a reference to such a similar provision under the CGST Act and / or KGST Act would be referred to as being under the "GST Law". 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is a private limited company with its registered office situated at Plot No.34/1. Rajiv Gandhi Infotech Park, MIDC, Hinjewadi, Pune - 411057, Maharashtra. ANSYS India is a wholly owned subsidiary of M/s. ANSYS Inc., US (hereinafter referred to as "Ansys US" or the "Parent Company'). The Parent Company has subsidiaries in various parts of the globe. (Ansys US referred hereafter may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he customer places Order on Ansys US, but Ansys India provides Marketing and Pre-Sales Technical Support Services in India. 4. Under the Marketing and Pre-Sales Technical Support Services, in both the above cases, Ansys India undertakes the following functions: (a) Ansys India understands the customer's requirements and through discussions, presentations, demonstrations, benchmarks, and evaluations, Ansys India showcases solutions using Ansys Software to the customer. This helps the customer to understand the functionality of Ansys Software, how it is relevant for their needs in terms of automated solutions, reduced response and turnaround time and cost savings in developing a new product and thereby helps the customer in decision making process; (b) Ansys India also explores new business opportunities with existing customers by conducting best practice sessions, technology days and discussions with the customers; (c) Once the order is placed by the customer on Ansys US, Ansys India also co-ordinates with the customer and Ansys US for signing of software licence agreement and other related documentation. (d) Ansys India also helps in follow up for collection of invoice val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on either side. In such cases, the customer support team of Ansys India may resolve the technical query by resorting to web support. Under Web-Support, the customer support team schedules a Webex meeting (interactive audiovisual computer based meeting) to better understand the customer's technical query or to better explain the resolution methodology to the customer. During the Webex meeting, the customer may share computer screen with the Ansys Technical Support team for effective resolution of their technical query. The customer is entitled to TECS for a specified period and it is the responsibility of Ansys US to support the customer for any troubleshooting or technical support that he may need in using Ansys Software. For providing this customer support, Ansys US has engaged Ansys India. It is pertinent to note here that, there is privity of contract between Ansys India and Ansys US and not between Ansys India and customers of Ansys US. Thus, even though the customers of Ansys US are "users" of Post-Sales Technical Support Services, they are not recipients of such services. "Recipient" in the present case is Ansys US in respect of Post-Sales Technical Support Services prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration from Ansys US will be a fixed percentage of the Sales Order value of the respective customer where Ansys India provided Post Sales Technical Support Services or will be on a basis or mechanism which may be mutually agreed. Accordingly, Ansys India would be remunerated separately by Ansys US for each of the above referred activities distinctly. In this context, the applicant states that it is important to note that the agreements will be mutually exclusive and it is not necessary that post-sales technical support will necessarily flow as a result of Marketing and Pre-Sales Technical Support. 6. Regarding the legal issues in relation to Marketing and Pre-Sales technical support services, in order to classify the said services, the applicant refers to the definition of "Intermediary" which has been defined under Section 2(13) of the IGST Act, 2017 as under: "13. "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." The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely acts as a facilitator or arranger in the sale of Ansys Software by Ansys US to Indian customers. 6.4 Having regard to the above, the applicant is of the view that they would be regarded as "intermediary' in terms of Section 2(13) of the IGST Act, 2017, as regards provision of Marketing and Pre-Sales Technical Support Services. 6.5 Having regard to the above, the applicant is of the view that HSN Code applicable for Pre-Sales Technical Support Services, in the capacity of intermediary, under Notification No.11/2017 (Rate) dated 28th June, 2017, would be as per the table below: Section No. Description 6 Distributive Trade Services; Accommodation, Food and Beverage Service; Transport Services; Gas and Electricity Distribution Services Heading No. Description 9961 Services in wholesale trade 99611 Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate wholesale commercial transactions between buyers and sellers, for a fee or commission HSN Description 996111 Services provided for a fee / commission or contract basis on wholesale trade 7. Regarding the Post-Sales Technical Support Services, the applicant makes the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Group No. Description 99831 Management Consulting and management services; information technology services HSN Description 998313 Information Technology (IT) Consulting and Support Services 7.3.2. The applicant refers to the Explanatory Notes to the Scheme of Classification of Services" issued on 12 th June 2018, by the Central Board of Indirect Taxes and Customs, wherein it is specified that: 3. The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services. These may be used by the assessee and the tax administration as a guiding tool for classification of services. However, it may be noted that where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. " Thus, these explanatory notes to the scheme of classification of services issued by the Central Board of Indirect Taxes and Customs may be used as a guide in determining the correct classification of services under the GST Law. 7.3.3. For the purposes of ascertaining the scope and coverage of HSN Code 998313, the applicant br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the context of Service Tax Law, the ratio of this decision still holds good even under GST Law. Thus, in the applicant's case, even though the consideration is payable as a percentage of order value or it may be as per the basis or mechanism which may be mutually decided, the applicant is of the view that the classification is Post-Sales Technical Support Services would remain the same, i.e. Information Technology (IT) Consulting and Support Services (HSC 998313). PERSONAL HEARING / PROCEEDINGS HELD ON 31.12.2018. 9. Sri Srikanth Balakrishnan, Chartered Accountant and duly authorised representative of the applicant appeared for personal hearing proceedings held on 31.12.2018, reiterated the facts narrated in their application and submitted copies of relevant documents. 10. FINDINGS & DISCUSSION: 10.1 We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri Srikanth Balakrishnan, Chartered Accountant and duly authorised representative of the applicant during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer, analyzing the requirements of the customers, showcasing the product, convincing of the features of the product which would meet the requirements of the customers, finalization of the product that is required by the customer, and after the order is placed on the overseas parent company, following it with the finalization of documentation and collection of invoice value - all amounts to the provision of Distributive trade services under Heading 996111, the description of which is "Services provided for a fee or commission or on contract basis on wholesale trade". This is clear from the reason that the consideration for the above service is fixed as a percentage of the Sales Order Value of the respective customer. 11. Regarding the classification of Post-Sales Technical Support Services, which is the second question, the nature of transaction is providing the persons who have purchased Ansys Software and using it, 24*7 customer support either through e-mail or through telephone or through Web-Support. The contract is between the end customers and the parent company in US and the applicant is providing the services to the end-customers on behalf of the parent company and charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is in providing support to the software supplied earlier, the same amounts to provision of information technology services which is covered under Heading 9983 - Other professional, technical and business services and Group 99831 - Management Consulting and Management Services; Information Technology Services and Service Code 998313 - Information Technology consulting and support services. The explanatory note to the scheme of classification of services also states that 998313 - Information Technology consulting and support services includes the provision of customer support in using or troubleshooting the software, upgrade services and the provision of patches and updates. Hence the services supplied is Information Technology Support Services covered under Service Code 998313 to the end-customer on behalf of the parent company by the applicant and by virtue of the clause (91) of section 2 of the CGST Act, the recipient of such service would be the parent company, as the consideration is receivable from the parent company. The manner of computing the value of supply is not changing the nature of services provided and hence there is no need to discuss the method of valuation of su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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