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TMI Blog2021 (3) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... providing training to apprentices, unskilled workers, students of various technical institutes, etc. All these activities, which are being supplied in conjunction with each other, can aptly be said to be naturally bundled where the principal supply will be training services being provided to the various candidates as mentioned. The activities related to the construction of the training workshop can be construed as ancillary services to this principal supply, i.e., training service, provided to various candidates as the same are essential for the said principal supply. All the activities are performed by the Appellant for the completion of the project run by their German Principal. Since the objectives of the said project is to provide the vocational/on-job training to the various candidates, like, apprentices, unskilled workers, students, etc. from various institutions and colleges to mitigate the investment related risks in developing and emerging countries. Hence, the entire gamut of activities performed by the Appellant can be construed as composite supply where the principal supply will be supply of training services to the various candidates from the selected institutions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - - - Dated:- 22-3-2021 - SHRI RAKESH KUMAR SHARMA, AND SHRI SANJEEV KUMAR, MEMBER Present for the Appellant: Shri Deepak Naik Order No. MAH/AAAR/RS-SK/35/2020-21 Date, 22-03-2021 (Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax 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 provisions under the MGST Act. 2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by M/s. Prettl Automotive India Pvt. Ltd, No. 433, Shed No. 1 2, Near Weikfield, Lonikand Taluka, Haveli, Pune. Maharashtra- 412216 ( hereinafter referred to as the Appellant ) against the Advance Ruling No. GST-ARA-20/2019-20/B-59 dated 15.12.2020 , pronounced by the Maharashtra Authority for Advance Rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the develoPPP.de project'. 2.5 In view of the above factual position, the Appellant, for the purpose of seeking clarity regarding the applicability of GST on the financial assistance received by them for carrying out the aforesaid activities in terms of the said Agreement entered with their German holding company, had filed an application for the Advance Ruling before the MAAR. The questions asked by the Appellant in their Advance Ruling Application were as under: (i) Whether the financial assistance to be received by the Appellant are covered as 'consideration for supply' and the activity is covered under the meaning of supply of services' in terms of section 7 of the Central Goods and Services Tax Act, 2017 / Maharashtra Goods and Services Tax Act, 2017? (ii) If the above activity is not considered as 'supply of services' then whether the said activity is to be considered as 'exempted supply' or 'non-taxable supply' and accordingly input tax credit is to be reversed in accordance with section 17 of CGST Act, 2017 / MGST Act, 2017 read with rule 42 of Central Goods and Services Tax Rules, 2017 / Maharashtra Goods and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be considered as export of services, and hence, the same is not a Zero- Rated Supply. 2.8 The Appellant, being aggrieved by the answer given by the MAAR in respect of the question no. 4 above, i.e., the issue related to the export of the services, the Appellant has preferred the present appeal before the Maharashtra Appellate Authority for Advance Ruling (hereinafter referred to as the MAAAR ). GROUNDS OF APPEAL 3. The Appellant, in their Appeal memorandum, have, inter-alga, mentioned the following grounds: (i) That when the MAAR has already ruled that the activities carried out by the Appellant are classifiable under SAC 999792 in terms of the Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017, another conclusion of the MAAR, that the activity of the Appellant is event based / event related, is mere conjecture and surmise in absence of any evidence in support of the said observation that the activities or services supplied by the Appellant to the German Holding Company M/s. Prettl GMBH are related to the event. (ii) Once the classification of the service has been held by the MAAR as 'Agreeing to do an act' specified under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n services provided by the Appellant, by way of construction of the Training Centre, are in relation to immovable property , which is located in India. Accordingly, as per the provisions of the Section 13 (4) of the IGST Act, 2017, the place of supply will be the place where the immovable property is located or intended to be located. In this case, the place of supply will be in India as the immovable property, i.e., the training centre is in India; (iii) That the training services provided by the Appellant are performance-based services which are provided to the persons/individuals located in India. Therefore, the place of Supply of the said performance- based services will be in India as per Section 13 (3)(b) of the IGST Act, 2017, even though the Appellant is receiving the consideration in convertible foreign exchange from its principal based in Germany. Therefore, the said supply of services will not be construed as export of services as all the conditions for the export, prescribed under Section 2(6) of the IGST Act, 2017, are not satisfied. PERSONAL HEARING 7.1 A hearing in the matter was held in the virtual mode via video conferencing on 04.03.2021, which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmissions of the students, imparting of knowledge, lessons, skills and training in their classrooms and workshops. As most of these courses are vocational in nature, on job training (actual training in the production shop of the factory), internship and apprenticeship training is required to be undergone by the students at some of the factory; that in the present case, some of the educational institutions have completed the practical training in the factory premises of the Appellant; (vii) that the Appellant has no role in selection, admission process, and overall conduct of the course. Selection of students for the program for on-job practical training is purely under the control of these institutions; (viii) that Section 13 (3)(b) of the IGST Act, 2017 relating to place of supply (i.e., performance test) is applicable only where individuals are represented as recipient of service or acting on behalf of the recipient; that in the present case, the individuals and beneficiaries, like, students, unskilled workers, and apprentices, are neither the recipients of the services itself (i.e., Prettl GmbH) nor they are appearing as employees or representatives or acting on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernatively, it has also been contended by the Respondent that the services provided by the Appellant are performance-based services, and the same are being provided to the individuals which are located in India. Hence, the place of supply of the said services will be in taxable territory in terms of the Section 13(3)(b) of the IGST Act, 2017. Thus, in view of the aforesaid position, it has been contended that the transaction between the Appellant and their holding company, i.e., Prettl GmbH will not qualify for the export of services as per the provisions laid under Section 2(6) of the IGST Act, 2017. Additional Submissions dated 05.03.2021 7.4. The extract of the additional submissions dated 05.03.2021 filed by the Appellant post the personal hearing scheduled on 04.03.2021 are as under: (i) that the activities carried out and cost incurred on the project by the Appellant are not limited only on account of training to individuals such as apprentice, unskilled workers, students but the same are also carried out to perform other functions, like creation of training area and training facilities such as plants and machineries, tools and equipment which are also used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Section 13(2) ibid., prescribing the place of supply as the location of the recipient, will be applicable in the subject case. DISCUSSIONS AND FINDINGS 8. We have carefully gone through the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with other relevant documents. We have also examined the impugned ruling passed by the Maharashtra Advance Ruling Authority, wherein it has been held that the services under question will be classified under the Service Accounting Code 999792 of the Annexure to the Notification No 11/2017 - Central Tax (Rate) dated 28.06.2017, bearing the description 'Agreeing to do an act'. As regards the question (iv) asked by the Appellant as to whether the said activities carried out by the Appellant qualify for 'export of service' under the provisions of the Integrated Goods and Services Tax Act, 2017 and can be exported without payment of IGST, the MAAR has held that the since the activities undertaken by the Appellant in terms of the Service Agreement entered with their German holding company can be construed as event based services , the place of supply in that case would be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the develoPPP.de project'. On perusal of the above, it is seen that the Appellant is undertaking multiple activities under different categories, i.e., activities related to construction, training, etc., against the lumpsum amount paid by their Principal, which can clearly be considered as composite supply in terms of Section 2(30) of the CGST Act, 2017. The definition of the composite supply as per Section 2(30) of the CGST Act, 2017 is reproduced herein under: (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; In the present case, the Appellant is undertaking multiple taxable supplies of services such as construction of training workshop, providing training to apprentices, unskilled workers, students of various technical institutes, etc. All these activities, which are being supplied in conjunction with each other, can aptly be said to be naturally bundled where the principal supply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipients of the services (i.e., Prettl GmbH) nor they are appearing as employees or representatives or acting on behalf of the Prettl GmbH, thereby, not complying with the first condition, i.e., (a) mentioned above. It has further been contended that the activities carried out by them can be considered as bundle of services which are not limited to the training to the individuals only but the same are beyond this. Further these activities do not require the physical presence of an individuals with the Appellant for the supply of services, thereby, not satisfying the condition laid under (b) above. Hence, in view of the submissions made hereinabove, they have contended that the place of supply in this case cannot be determined in terms of Sections ranging from 13 (3) to 13 (13) of the IGST Act, 2017, therefore, the provision of Section 13 (2) ibid., prescribing the place of supply as the location of the recipient, will be applicable in the subject case. 12. With regard to the above additional submissions filed by the Appellant, it is observed that all the activities being carried out by the Appellant are either ancillary or incidental to the principal supply, which in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l other supplies being ancillary and incidental to the principal supply. 13. Now, once the activities undertaken by the Appellant are held as composite supply where the training service being imparted to the various candidates is the principal supply, the said supply will squarely be covered under the SAC 999294 prescribed at SI. No. 600 of the Annexure to the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and bearing the description Other education and training services nowhere else classified . 14. However, on perusal of the impugned Advance Ruling Order dated 15.12.2020 , it is seen that MAAR has classified the activities undertaken by the Appellant under the SAC 999792 bearing the description Agreeing to do an act in terms of the entry at SI. No. 718 of the Annexure to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. As regards the aforesaid ruling given by the MAAR, it is observed that the activities performed by the Appellant, which is a composite supply having training services as the principal supply as discussed hereinabove, can be aptly classified under the more specific SAC 999294 bearing the description Other education and training s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST Act have to be fulfilled. In the present case, the location of the supplier i.e. the Appellant is in India. The recipient in the present case is the German company- as per Section 2 (93)(a) of the CGST Act, 2017, the person who is liable to pay the consideration is the recipient. This brings us to the question of place of supply of the impugned services and for that we would like to examine the nature of services provided by the Appellant. Since it has been established that the Appellant is providing composite services of which the training services is the principal supply, it can be said that the Appellant is undertaking the performance-based service where the said training services are supplied to individuals, such as apprentices, unskilled workers, students of various technical institutes and colleges, who can be said to be representing on behalf of the recipient, i.e., the Principal located in Germany as the Appellant are receiving the consideration/financial assistance for undertaking the aforesaid training services being provided to above-said individuals from their German Principal, therefore, it can unambiguously be said that the above-mentioned individuals whom the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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; 18. Thus, in view of the above discussions and findings, we pass the following order: ORDER 19. We, hereby, modify the Ruling passed by the MAAR vide Order No. GST-ARA-20/2019-20/B-59 dated 15.12.2020 by holding that the entire gamut of activities undertaken by the Appellant at the behest of their Principal will be aptly classified under SAC 999294 prescribed at Sl. No. 600 of the Annexure to the Notification No. 11/2017-C.T. (Rate), dated 28.06.2017 and bearing the description Other education and training services nowhere else classified . As regards the question as to whether the activities under question will be considered as zero-rated supply in terms of Section 16(1) of the IGST Act. 2017 and qualifies for 'export of service in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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