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TMI Blog2021 (11) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... to FIS India. Beacon raised the invoice directly to the applicant for the referral fee. In terms of Section 5 of IGST Act 2017, IGST is levied on all inter-state supplies of goods or services, and in terms of Section 2 (21) of Act, ibid, supply shall have the same meaning as assigned to in Section 7 of the CGST Act 2017. The applicant, with regard to taxability of the impugned service, admitted that the said service amounts to supply in terms of Section 7 of the CGST Act 2017. It is also admitted by the applicant that the impugned services are imported into India and shall be treated to be an inter-state supply in terms of Section 7(4) of the IGST Act 2017. Place of supply of service - HELD THAT:- The issue whether the impugned services qualify to be import of services or not it is required to determine the place of supply of the impugned service, which is beyond the jurisdiction of this authority in terms of Section 97(2) of the CGST Act 2017. The application is disposed off without any ruling as the determination of place of supply is beyond the jurisdiction of this authority. - KAR/ADRG/52/2021 - - - Dated:- 29-10-2021 - DR. M.P. RAVI PRASAD AND SRI. T. KIRAN RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the said services rendered by Beacon US to applicant? 5. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue: 5.1 Workplace Options Private Limited (Applicant or Workplace ) is a company engaged in providing human resource consulting services, employee assistance services to its corporate customers across India or outside India. The Applicant is part of a multi-national group and is a subsidiary of Workplace Options LLC. Background of Transaction 5.2 Workplace Options LLC (US) has entered into a global arrangement with Beacon Health Options Inc. - US (previously known as Value Options Inc. - US) in November 2009 for purpose of mutual referral of clients and work agreements to Workplace Option Group Companies across the Globe (enclosed as Annexure B ). Beacon US is a company established in USA and does not have any office or fixed establishment in India. 5.3 As part of the global arrangement, Beacon Health Options Inc. (Beacon US ) has entered into arrangement for the Indian market involving Workplace Options India Private Limited (enclosed as Annexure A ). The following are the key terms of the agreement: a. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r services, for the subject application, the applicant only seeks a ruling on the referral services which is being rendered between Beacon US and Workplace Options India. The business model in India clearly involves Beacon US recovering a referral fee from Workplace India based on the billings between Workplace India and FIS India. 6. Applicant s interpretation of Law: 6.1 The applicant is seeking an advance ruling on the determination of the tax liability of the subject services procured by Workplace India from Beacon US in respect of referral of the FIS client to Workplace India. As part of this question, applicant also seeks a ruling on whether the said activity fall within the definition of intermediary services under the IGST Act. 6.2 The applicant submits that the said activity of provision of referral services by Beacon US to Workplace India involving raising an invoice for the referral work in respect of the FIS contract, which it has arranged/ facilitate between FIS India and Workplace India, is an intermediary service and the said amount is not taxable in India in terms of the IGST Act. The reasons for this conclusion are submitted herewith. Relevant Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective enactments. Section 1 of the IGST Act read with Article 286(1) / (2) also restrict jurisdiction of the IGST only to services which are supplied in India or whose place of supply is in India. The parliament the inform of section 7 and 8 of the IGST Act formulated the principles of determining the place of supply of a transaction which would form the basis of whether the said transaction is within India or not. Therefore, where the services rendered outside India and does not constitute an import of service into India, the IGST law does not have jurisdiction to tax the same in India. 6.8 A service would be termed as imported into territory of India if it satisfies the provisions of section 2(11) of the IGST Act which reads as follows: (11) import of services means the supply of any service, where- (i) the supplier of service is located outside India; (ii) the recipient of service is located in India; and (iii) the place of supply of service is in India; 6.9 In the present case, Beacon does not have any presence or fixed establishment in India and hence Beacon US is considered to have been located outside India for the purpose of referral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia to FIS India and the said deal was referred by Beacon US. Without the involvement of Beacon US, workplace would not have obtained this customer and FIS would not have obtained the employee assistance services from Workplace. d. FIS acknowledges that the employee assistance service from Workplace India and role of Beacon scope of work is only to refer the client i.e. FIS group to Workplace India e. As per clause 3 of the agreement dated 01.11.2019 any changes to the fee between Workplace India and FIS would also have to be agreed between Beacon US and Workplace India. This is a critical clause to show that Beacon is involved in all the matters of the contract between Workplace India and FIS India and also that Beacon US income is depending on the price agreed between Workplace India and FIS India. f. Beacon US is not providing the said referral activity on its own account but for the benefit of and behalf of Workplace India. 6.14 Since the said services by Beacon US to Workplace India qualifies as an intermediary, in terms of section 13 of the IGST Act, the place of supply of such intermediary services would be the location of the supplier of such intermediar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent for a service [an agent for buying or selling of goods is excluded] iv) Recovery Agent Even in other cases, wherever a provider of any service acts as an intermediary for another person, as identified by the guiding principles outlined above, this rule will apply. Normally, it is expected that the intermediary or agent would have documentary evidence authorizing him to act on behalf of the provider of the main service . 6.16 The above explanation to the term intermediary services makes the said activity of referral services provided by Beacon US to Workplace India as falling with the said term. This is primarily because Beacon US has acted as a mediator between Workplace India and FIS India. Beacon US has not altered or processed the employee assistance services by Workplace India to FIS India. FIS is also well acquainted with the fact that Beacon has referred the work to Workplace India and the main service (employee assistance service) would be provided by Workplace India. This establishes that Beacon US has arranged/ facilitated the services between FIS India and Workplace India. Hence the said activity falls within definition of intermediary services . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into a global arrangement with M/s Beacon Health Options Inc. -USA (formerly known as Value Options Inc.-USA), which is a company established in USA and does not have any office or fixed establishment in India, for the purpose of mutual referral of clients and work arrangements to Workplace Options Group Companies across the Globe. 11. M/s Beacon, USA, as part of global arrangement identified a customer M/s FIS Global Solutions India Private Limited ( FIS India ) and referred the said client to the applicant, for a commission named as referral fee based on a formula, agreed by both the parties, which is equivalent to a percentage of the price charged by the applicant to FIS India. Beacon raised the invoice directly to the applicant for the referral fee. 12. In view of the above, the applicant sought for advance ruling in respect of the questions at para 4 supra, as to whether the impugned services provided by M/s Beacon, USA to the applicant are liable to tax under IGST Act 2017; whether the said service qualifies to be an import of service and if yes who is the person liable to pay tax. 13. We proceed to examine the issues, one by one. In terms of Section 5 of IGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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