9911796707
TMI Blog2022 (4) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant has sought advance ruling in respect of the following questions: a) Whether Consultancy Services rendered to ADB, Manilla would qualify as "export of services" in terms of Section 2 (6) of the Integrated Goods and Services Tax Act, 2017 ("IGST Act")? b) If the Consultancy Services rendered to ADB, Manilla do not qualify as "export of services", whether ADB would be required to obtain refund of GST charged on Invoice issued for Consultancy Services in terms of Section 55 of the Central Goods and Services Tax Act, 2017 ("CGST Act") or the services would be exempt as per provisions of the Asian Development Bank Act, 1966 ("ADB Act")? 4. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue: 4.1 The Consultancy Services, broadly, envisage multifarious study to conceptualise a transit-oriented development plan in respect of construction of new metro lines, phases 2A and 2B, with a total length of 56 km including 30 stations and three depots, at Bengaluru, Karnataka. In this regard, the construction of new metro lines would be undertaken by Government of Karnataka, for which Government of India requested ADB for financial assistance. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of services". In this regard, Section 16 of the IGST Act lays down the criteria for determining the "place of supply" of services in cases where location of recipient (i.e. ADB in the instant case) is outside India. Section 13 (2) of the IGST Act lays down the default rule that "place of supply" services would be location of recipient of service except in cases enlisted under Section 13(3) to 13 (13) of the IGST Act. In this regard, Section 13 (4) of the IGST Act provides as follows: "The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located" 5.1.4 Given that the Consultancy Services are proposed to be rendered in respect of the construction of new metro lines, which may be construed to be services in relation to "immovable property", i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies of services received by them. Section 55 if reproduced below for ease of reference: "55. Refund in certain cases. The Government may, on the recommendations of the Council, by notification, specify any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of persons as may be specyied in this behalf, who shall, subject to such conditions and restrictions as may be prescribed, be entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them." 5.2.2 The Government of India has issued a Circular for clarifying its stand in respect of applicability of GST on ADB. In Circular No. 83/02/2019- GST dated 1st January 2019 ("GST Circular"), it is stated as follows: "2. The ADB Act, 1966 provides that notwithstanding anything to the contrary contained in any other law, the Bank, its assets, properties, income and its operations and transactions shall be exempt from all the taxation and from all customs duties. The Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracts only): "ARTICLE 56 EXEMPTION FROM TAXAITON 1. The Bank, its assets, property, income and its operations and transactions, shall be exempt from all taxation and from all customs duties. The Bank shall also be exempt from any obligation for the payment. Withholding or collection of any tax or duty. 2. No tax shall be levied on or in respect of salaries and emoluments paid by the Bank to Directors, alternates, officers or employees of the Bank, including experts performing missions for the Bank, except where a member deposits with its instrument of ratification or acceptance a declaration that such member retains for itself and its political sub-divisions the right to tax salaries and emoluments paid by the Bank to citizens or nationals of such member. ..." 5.2.5 As per the aforesaid provisions of the ADB Act, the services rendered by IBI should be exempt, whereas in terms of the Section 55 of the CGST Act read with GST Circular, it emerges that such services should not be exempt and ADB should obtain refund of the GST paid by it to IBI from Government. Please clarify on the aforesaid aspect basis which IBI would decide whether it is required to charge GST on its i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down under Section 2(6) of the IGST Act are fulfilled in respect of the said services or not, one of which is the "place of supply" of the said services, whether it is in India or outside India. Thus to determine whether the said services would qualify as "export of services" or not it is essential to decide the "place of supply" of the said services. 8.5 If the authority determines the "place of supply" of said services as outside India, then the applicant would not be required to pay GST on the said services, as being "zero rated supply". In effect, the authority would determine the liability of the applicant to pay tax on services, which is squarely within the power of "determination of the liability to pay tax on any goods or services or both, in terms of Section 97(2)(e) of the CGST Act. 8.6 The above averment finds support in judgement of Hon'ble Kerala High Court in the case of Sutherland Mortgage Services INC Vs. Principal Commissioner and others 2020 (3) TMI 186, wherein it is held that it is true that the issue relating to the determination of place of supply is not expressly enumerated in any of the clauses as per clauses (a) to (g) of Section 97(2) of the CGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the words "directly in relation to the immovable property" in respect of similar provision under erstwhile Service tax laws (i.e. Chapter V of the Finance Act, 1994 as it existed at that point in time) and provide as follows: "There must be more than a mere indirect or incidental connection between a service provided in relation to an immovable property, and the underlying immovable property. For example, a legal firm's general opinion with respect to the capital gains tax liability arising from the sale of a commercial property in India is basically advice on taxation legislation in general even though it relates to the subject of an immovable property. This will not be treated as a service in respect of the immovable property. ...... The place of provision of services rule applies only to service which relate directly to specific sites of land or property. In other words, the immovable property must be clearly identifiable to be the one from where, or in respect of which, a service is being provided. Thus, there needs to be a very close link or association between the service and the immovable property. Needless to say, this rule does not apply if a provision of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the arguments made by the applicant and the submissions made by their learned representative during the time of hearing. 11. The Applicant, has entered into a Contract with Asian Development Bank, Manilla for rendering Consultancy Services which broadly envisage multifarious study to conceptualise a transit-oriented development plan in respect of construction of new metro lines, phases 2A and 2B, with a total length of 56 km including 30 stations and three depots, at Bengaluru, Karnataka. In view of this, the applicant sought advance ruling in respect of questions mentioned at para 3 supra. 12. The first question is "Whether Consultancy Services rendered to ADB, Manilla would qualify as "export of services" in terms of Section 2(6) of the IGST Act 2017". In this regard we invite reference to Section 2 (6) of the IGST Act 2017, wherein "export of services" has been defined as under: 2(6) "export of services means the supply of any service when,- (i) the supplier of service is located 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 suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CGST Act, 2017 states that the Authority for advance ruling constituted under the State Act, shall be deemed to be the Authority in respect of the CGST Act, 2017 also. The provision is reproduced as under- "96. Authority for advance ruling - Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory." From the above it is seen that the Authority for advance ruling is constituted under the provisions of the State GST Act and shall be deemed to be the Authority for advance ruling in respect of that State under the CGST Act, 2017 also. Thus it can be seen that the Authority for advance ruling is constituted under the respective State Act and not the Central Act. This would mean that the ruling given by the said Authority will be applicable only within the jurisdiction of the concerned state. It is for this reason that questions on determination of place of supply cannot be raised with the Authority of advance ruling. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination of place of supply, which is one of the crucial issues to be determined as to whether or not it fulfills the definition of place of service, would also come within the ambit of the larger issue of "determination of liability to pay tax on any goods or services or both" as envisaged in clause (e) of Section 97(2) of the Act". It could be seen from above that the Hon'ble High Court of Kerala held that determination of place of supply is one of the crucial issues and would come within the ambit of the larger issue of determination of liability to pay tax on goods or services or both. It is pertinent to mention here that the question before the Authority for Advance Ruling, Kerala was as under : "Whether supply of services by India branch of Sutherland Mortgage Services Inc. USA to the customers located outside India shall be liable to GST in the light of the intro company agreement entered into by the said branch with the principal company incorporated in USA?" It could be seen from above that the question is directly linked to the GST liability, whereas in the instant case the question is "Whether consultancy services rendered to ADB, Manilla would qualify as "ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
