9911796707
TMI Blog2020 (8) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract between the parties and by reference to (a) who has the contractual right to receive the services; and (b) who is responsible for the payment for the services provided (i.e., the service recipient). This essential difference has been lost sight of by the Appellant. In the present case there is no privity of contract between BMTC and the commuters. Such commuters may be the users of the services provided by BMTC but are not its recipients. The Education Guide provides that a person who arranges or facilitates a provision of a service, but provides the main service on his own account is excluded from the definition of intermediary . The Education Guide specifically recognizes and well explains that all situations of provision of services on a client s behalf, will not qualify as an intermediary . Where the service is provided on the own account of the service provider, the categorization as an intermediary does not arise. The relevant extract of the Education Guide issued by the C.B.E. C. in June 20, 2012 - The clarification fully recognizes an arrangement between a service provider and a service recipient, where customers of the service recipient are dealt with by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his own account on a principal to principal basis for a consideration. Whether in terms of Section 15 of the CGST Act, the cost of the bus passes would form part of the value of the service provided by the Appellant? - HELD THAT:- It is amply clear that those instruments which satisfy the conditions of being accepted as consideration/part consideration against purchase of specified goods and the identities of the potential suppliers are indicated in the instruments are to be considered as Vouchers for the purposes of GST. Vouchers are neither money nor actionable claim. It is not a claim to a debt nor does it give a beneficial interest in any movable property to the bearer of the voucher. Similarly, in the instant case, the bus passes are purchased by the commuters on paying a value in money. The commuter produces the bus pass for purchasing the service of transportation. The bus pass only give the commuter the right to travel. If the commuter does not use the bus pass within the duration for which it is valid or loses the bus pass, it becomes invalid and cannot be used to procure the service of transportation. The bus pass is only a contract of carriage. A contract is not prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alore Metropolitan Transport Corporation (hereinafter referred to as 'BMTC') whereby BMTC allots 1 bus to the Appellant for every 50 passes purchased. The Appellant receives the following types of bus passes from BMTC for distribution: - Non AC regular BMTC bus pass; and - Combo bus pass which can be used for Non-AC and AC buses BMTC does not charge GST for the non-AC bus passes since the same is exempt from GST vide Entry No. 15 of Notification No. 12/2017-CT(R) dated June 28,2017. However, for Combo bus pass (i.e. which can be used for non-AC and AC buses), BMTC charges GST at 5% as per Entry No. 8(ii) of Notification No. 8/2017- IT (R) dated June 28, 2017. 5. The Appellant charges a separate fee of ₹ 300 per commuter as 'facilitation fee' for arranging the transport facility for the said commuters. In this connection the Appellant sought an advance ruling in respect of the following question: a) Whether the value of bus passes distributed by the applicant to the commuters is to be included in the value of facilitation charges as per section 15(2) of the CGST Act, 2017 and KGST Act, 2017? b) Whether the supply of service in the hands of the applicant could be cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that apart from the facilitation charges, they receive the actual amount incurred to obtain such bus passes for distribution and therefore the Appellant cannot be held to be the service recipient of transportation service since the said services are primarily rendered to the commuters who are the ultimate beneficiary of transportation service provided by BMTC. 7.3 They further submitted that they act as a pass-through by mediating the transportation service provided by BMTC to the occupants of ITP B; that they are an intermediary with respect to the supply of bus passes in as much as they arrange the service of transportation by providing the bus passes to the occupants and do not provide the transportation service on its own account; that the Appellant is incapable of providing transportation services owing to a lack of a government permit to do so; that they are providing a service which is merely in the nature of facilitation to enable the commuters to avail the transportation facility provided by BMTC; that as per the definitions of "Contract carriage" and "Stage carriage" as given in the Motor Vehicles Act, permits are to be obtained for operating stage carriage and contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. The responsibility of the Applicant is towards facilitation of the same. The same can be substantiated by the agreement between BMTC and the Applicant. 7.6. They relied on the decision of the Maharashtra AAR in M/s. Jotun India Pvt Ltd reported in 2019 (10) TMI 482 which held on a similar arrangement between the applicant, its employees and an insurance company that the applicant is not rendering any service of health insurance to the employees' parent and hence there is no supply of services in the instant case of transaction between employer and employee. They stated that the principles upheld in the above case will squarely apply to their case also and the recovery of bus pass amount cannot be treated as an activity in the course of business or for the furtherance of business 7.7. They submitted that the arrangement as per the Agreement between the Appellant and BMTC provides for arranging transportation service; that as per the agreement, the Appellant has merely agreed to facilitate the transportation service and assist the commuters to obtain the passes. Relevant extract of the agreement is as follows: "the second party is desirous of arranging for transport for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the commuters; that in the subject transaction, the Appellant has stepped into the shoes of facilitator who has helped bring about an outcome by providing unobtrusive assistance to both commuters and BMTC. They further submitted that they do not possess any transport service permits but merely facilitates transport services between BMTC and the commuters; that the bus passes are provided to the commuters at cost i.e. at the price at which these are received by the Appellant from BMTC; that in this arrangement, they receive and incur expenditure on behalf of the recipient and recover the exact amount from the commuters. Hence the Appellants have restricted themselves to be an agent or facilitator of service and the facilitation charges for making the bus passes available to the commuters are collected from the commuters. 7.11. Regarding the value to be adopted for the service of facilitating transportation, the Appellant submitted that as per section 15 of the CGST Act, 2017 value of supply is defined as: "(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bus passes distributed by the Appellant to the commuters is not to be included in the value of facilitation charges in terms of section 15(2) ofthe CGST Act and KGST Act. PERSONAL HEARING: 8. The Appellants were called for a personal hearing on 10th January 2020 and were represented by Shri. Prashanth Bhat & Shri Nitesh Kumar of M/s. Deloitte Touche Tohmatsu India LLP who reiterated the submissions made in the grounds of appeal. In addition, the authorized representatives raised the argument that the bus pass given by the Appellant to the commuters is an "Actionable claim". In this regard, the Appellant sought time to make additional submissions on this point. Accordingly, vide letter dated 24th January 2020, the Appellant submitted that in the light of the definition of the term "actionable claims" in Section 2(1) of the CGST Act and ruling of the Supreme Court in H. Anraj vs Govt of Tamil Nadu (AIR 1986 SC 63) = 1985 (10) TMI 258 - SUPREME COURT, it can be construed that bus passes are an acknowledgement of receipt of money in advance for rendering services in the future; that as the money has been received in advance for the same, it can be contended that it constitutes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. There are two types of bus passes provided by BMTC to the Appellant viz. Non-AC bus pass and Combo bus pass which can be used for both AC bus as well as non-AC bus. The rate payable by the Appellant to BMTC depends on the type of bus provided by BMTC i.e AC or non-AC bus. The agreed upon rate payable by the Appellant to BMTC shall be deemed to include salaries, wages, bonus, overtime pay, any other renumeration and compensation tax and levies payable to the admin, depot and bus crews in accordance with the existing laws and regulations. BMTC only provides the buses along with the crew. The Appellant decides on the schedule for each bus route and the same is communicated to the BMTC depot so that the same is maintained. The Appellant has the prerogative of introducing a new route, deleting an existing route and also changing the schedules of an existing route. BMTC agrees to provide the additional buses whenever the Appellant introduces new routes subject to the agreed upon rate of 1 bus for every 50 bus passes. All the commuters travelling in the buses engaged by the Appellant shall possess identification cards and the monthly passes/causal passes issued by the Appellant. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by Verizon India. 12. Drawing a parallel to the instant case, we find that in order to determine who, the recipient of service is, the agreement under which such service has been agreed to be provided, has to be examined. When the Agreement between BMTC and the Appellant is examined, it is plain that the recipient of the service is the Appellant and it is the Appellant that is obliged to pay for the services provided by BMTC. The position does not change merely because the actual users of the transportation service are the commuters. The 'recipient' of the service is determined by the contract between the parties and by reference to (a) who has the contractual right to receive the services; and (b) who is responsible for the payment for the services provided (i.e., the service recipient). This essential difference has been lost sight of by the Appellant. In the present case there is no privity of contract between BMTC and the commuters. Such commuters may be the 'users' of the services provided by BMTC but are not its recipients. This was lucidly explained by the CESTAT in the case of Vodafone Essar Cellular Ltd. v. CCE, Pune-III 2013-TIOL-566-CESTAT-Mum = 2013 (7) TMI 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well explains that all situations of provision of services on a client's behalf, will not qualify as an "intermediary". Where the service is provided on the "own account" of the service provider, the categorization as an "intermediary" does not arise. The relevant extract of the Education Guide issued by the C.B.E. & C. in June 20, 2012 is reproduced: "5.9.6 What are "Intermediary Services "? . . . Similarly, persons such as call centres, who provide services to their clients by dealing with the customers of the client on client's behalf but actually provided these services on their own account, will not be categorized as intermediaries." The clarification above fully recognizes an arrangement between a service provider and a service recipient, where customers of the service recipient are dealt with by the service provider, shall not qualify to be an "intermediary". This principle well covers the present arrangement. The service is provided by BMTC to the Appellant as recipient but the customers of the Appellant are dealt with by the service provider. This arrangement does not make the Appellant an intermediary. We hold that the Appellant is receiving the services from BMTC o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as part of the service provided by them on their own account. If they were merely facilitating the service or acting as an intermediary, as claimed by them, the bus passes would have been issued by BMTC to the commuters. In the light of the above discussions, we agree with the ruling given by the lower Authority and hold that the service provided by the Appellant in arranging the transportation of the employees is not rendered in the capacity of an intermediary and is not a facilitation service between BMTC and the commuters. The service of transporting the employees of the corporate clients of the International Tech Park is rendered by the Appellant on his own account on a principal to principal basis for a consideration. 15. We now come to the second aspect which is whether in terms of Section 15 of the CGST Act, the cost of the bus passes would form part of the value of the service provided by the Appellant. 16. It is the contention of the Appellant that the bus pass given by the Appellant to the commuter is an "actionable claim"; that the bus passes are an acknowledgment of receipt of money in advance for rendering services in the future; that as the money has been received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of receipt of money in advance for rendering telecom services in future and as the money has been received in advance, it constitutes a debt to the service provider. At the outset we state that the case of Bharti Airtel Ltd was rendered by the West Bengal Tax Tribunal in the context of Sale of Goods Act wherein the definition of 'goods' under the said Act excluded actionable claims. Under GST law however, 'Goods" have been defined to include actionable claims. Further, under GST, 'voucher' is specifically defined in Section 2(118) to mean "an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument". It is further observed that the definition of 'Voucher' has been added to the CGST Act after discussion in the GST Council, while approving the draft Acts. The related portion of the Minutes of the 5th GST Council Meeting held on 2nd & 3rd December, 2016 in New Delhi, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
