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TMI Blog2020 (11) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... t different from what is required to declare the MARC holder a fixed establishment. Here, as per the findings, the suitable structure in terms of human and technical resources is maintained not at the premises of the MARC holder but at the premises of BCCL. This does not comply the definition of the fixed establishment . From the facts of the case, it is seen that the IZ-Kartex named after Korobkov, the Russian company has entered into the MARC with BCCL. They have deployed DDP-N, an Indian company as the subcontractor. DDP-N in turn, issues invoice to the Russian company. Again, the Russian company is raising bills on BCCL against supply of service. Hence, it is amply clear that the service is being provided by the appellant s foreign entity. Contrary to any material finding in the order of the Advance Ruling, it is clear beyond doubt that the conditions of import are satisfied in the present case. The order of Advance Ruling is modified to the extent that the supply of service by the appellant to BCCL qualifies as import of service as defined under Section 2(11) of the IGST Act, 2017 and GST is payable on such import of service by BCCL under reverse charge mechanism in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices imported by them from the appellant under reverse charge mechanism. 3. The appellant company sought advance ruling to specify the person who is liable to pay tax in the aforesaid circumstances and whether it is legally justified by BCCL to deduct GST from payments made to the foreign company. 4. The WBAAR in its Ruling No. 04/WBAAR/2020-21 dated 29.06.2020 = 2020 (7) TMI 140 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL , has held that supply of service to BCCL in terms of MARC is not import of service. The recipient is not, therefore, liable to pay GST on reverse charge basis in terms of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017. The applicant, being the domestic MARC holder is liable to pay tax as applicable in terms of clause 9.2.2 of the MARC. 5. The Appellant has filed the instant Appeal against the above Advance Ruling with the prayer to set aside the impugned Advance Ruling passed by the WBAAR or pass any such further order (s) as may be deemed fit and proper in facts and circumstances of the case, on the following grounds: a) The impugned order has been passed without any application of mind. The Advance Ruling Authority has firstl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been concluded that the branch office of the appellant is the supplier of service in the facts of the present case. d) The impugned Order completely ignored the existence and appointment of DDP-N as a sub-contractor for performance of services under the MARC. In terms of the sub-contract agreement entered into between the appellant and DDP-N, the latter has been working and operating as per the exclusive instructions of the appellant, and is raising invoices for its services on the appellant. DDP-N is charging GST @18% in its invoices. e) The Advance Ruling Authority has made a mere assertion that the branch office of the appellant is the supplier of service without adducing or relying on any substantial / material evidence, whatsoever, to establish the actual role of the branch office in the performance of stipulated services under the MARC. Despite an express factual submission that the branch office does not maintain any human or technical resources which are capable of performing the technical services under the MARC, the impugned Order has reached a clearly arbitrary and irrational conclusion without adducing even a shred of evidence in support of the claim made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the appellant replied that they are not providing service to BCCL occasionally. They are in contract with BCCL since 2015 and the service is provided throughout the year. Hence, it can neither be said that they are casual taxable person and should have taken registration as a casual taxable person or a non-resident taxable person nor that they have a fixed place of business in India. b) In one of the Returns submitted by the appellant, it has been mentioned that the subcontractor namely, M/s. DDP-N had supplied to IZ-Kartex office at Kolkata, which indicates that the place of supplier is in India as per Section 12 of The Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act). Thus, the supply cannot be termed as imports. Accordingly, the provisions of payment of GST under reverse charge mechanism as provided under Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 is not applicable in the present case. To this submission of the respondent, the appellant submitted that normally all invoices are issued by DDP-N in the name of IZ-Kartex named after P.G. Korobkov Ltd. The instance mentioned by the respondent was a mistake, which was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of GST, then this transaction would lead to unjust enrichment of BCCL. The appellant had claimed that BCCL is liable to pay IGST under reverse charge in terms of Notification No. 10/2017-IT(Rate) dated 28.06.2017. 10. On the other hand, it is seen from the order of advance ruling issued by Authority for Advance Ruling (AAR) that it contains two paragraphs 4.4 in the said order. In the former paragraph 4.4 of the said order, the AAR has pointed out the terms of the agreement and in the latter 4.4, the AAR has concluded that the MARC Holder maintains suitable structures in terms of human and technical resources at the sites of BCCL. It ensures supervision of the equipment, supply of spares and consumable and overheads for 5000 working hours for seventeen years, indicating sufficient degree of permanence to the human and technical resources employed at the sites. From this the AAR concluded that the MARC holder does all these from the fixed establishment as defined under Section 2(7) of the IGST Act and hence the location of the supplier should be in India as per Section 2(15) of the IGST Act. 11 While going through the subject order of Advance Ruling, it is seen that the WBA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the fixed establishment . The appellant, on the other hand, has claimed that their activity is import of service and the tax is payable by BCCL. The WBAAR has not made any observation on this aspect, while holding that the appellant s domestic entity (domestic MARC holder) is the supplier of the service. Import of service, as defined under Section 2(11) of the IGST Act, 2017, contains supply of service containing of the following three elements: i. The supplier of service should be located outside India ii. The recipient of service should be located in India iii. The service should be provided in India. From the facts of the case, it is seen that the IZ-Kartex named after Korobkov, the Russian company has entered into the MARC with BCCL. They have deployed DDP-N, an Indian company as the subcontractor. DDP-N in turn, issues invoice to the Russian company. Again, the Russian company is raising bills on BCCL against supply of service. Hence, it is amply clear that the service is being provided by the appellant s foreign entity. Contrary to any material finding in the order of the Advance Ruling, it is clear beyond doubt that the conditions of import as me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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