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TMI Blog2020 (1) TMI 1596X X X X Extracts X X X X X X X X Extracts X X X X ..... delve deeper and resort to in relation to the function entrusted to a Panchayat under article 243G of Constitution of India, it attains the status which fits very properly. The entry requires the services to qualify either 243G or 243W. 243W being relevant for Municipality. Thus, the services provided by ITEES to DoSD are held to find favour with entry 3 of notification 9/2017 IGST (Rte) dated 28.06.2017 and thereby are held to be exempt from GST. As the appellant has been adjudged falling under reverse charge provisions as per section 5 (3) of the IGST Act, 2017 the second leg of this sub-section also comes into play. It says that once liability of reverse charge is imposed, all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. This provision makes the appellant a supplier. Thus, it is a case of no supply as per notification 11/2017 IGST (Rate) dated 28.06.2017. X X X X Extracts X X X X X X X X Extracts X X X X ..... e Singapore (I TEES) based Consultancy Company. 6. The total consideration has been decided to be USD $38,12,740/- which is to be paid in 11 installments. Appellant has reproduced the Clause 38.1 of the Agreement describing the consideration agreed between the parties. 7. The Contract price is US $ 38,12,740 (Inclusive of consultant country taxes). The lump sum amount is exclusive of provisional sums and contingency, which will be covered separately under the project, if required. The lump-sum amount is exclusive of all Indian taxes, levies and duties imposed by the applicable law. If the applicable law requires any Indian taxes, levies or duties to be paid, the consultant shall be entitled to invoice the client for a higher amount such that, after the payment/withholding of the relevant Indian taxes, levies or duties, the consultant shall receive the original amounts as stated in Appendix C of application. 8. The GSP will impart training to 10,000 students every year by trainers of international standard. The park will function on the spirit of 'With Industry-For Industry' and the trained students will be given placement in India and outside India at international le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical Education, Skill Development, and Employment (DTESD&E), GOMP; and the implementing agency is the Directorate of Skill Development (DOSD)(hereinafter referred to as 'the Appellant'), having their registered office at Directorate of Skill Development, Ahead Rampur Square, Narmada Road, Jabalpur, Madhya Pradesh, India - 482002. 2. The MPSDP project aims to equip the men and women of Madhya Pradesh with mid- to advanced-level skills to meet emerging demands in the priority manufacturing and services sectors, as well as for advanced agricultural skills. To this end, the project will help GOMP transform the State's Technical Vocational Education and Training (TVET) system to build quality skilling opportunities. It will support the establishment of a new Global Skills Park (GSP) to impart advanced job-ready skills training of international standards. It will also modernize 10 ITIs across the state's 10 divisions by upgrading training facilities and skills programs to deliver quality, industry relevant training. 3. The project aims to train nearly 100,000 youth from underprivileged and economically weaker sections of the society over a period of 5 years. 4. In 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TEES. 11. ITEES, Singapore shall raise invoices as per the applicable taxation laws of the Singapore against the services provided to the DoSD. Government of Madhya Pradesh in respect of the said services in Madhya Pradesh, India. a. The consideration is to be paid in foreign currency (i.e. US Dollars) directly from Asian Development Bank, Manila, Philippines as per loan and project agreement with Government of India and Government of Madhya Pradesh, respectively. b. The DoSD, Government of Madhya Pradesh is the recipient of services and ITEES, Singapore is the supplier of services. c. The above services rendered by ITEES can be said to Import of services within the meaning of sec. 2(11) of IGST Act 2017. 12.Sec 5 (3) of IGST Act, 2017 read along with Notification No. 10/2017 Integrated Tax (Rate) dated 28th June 2017 provide for the liability of tax to be paid on reverse charge mechanism in case of Import of service by any person located in the taxable territory. Once liability of reverse charge is imposed, all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution of India. It is the social responsibility of the Government to impart Technical and Vocation training to create skilled workforce. There is no commercial or business motive in the set-up of this Global Skill Park rather the sole objective is to discharge the duties entrusted in the Constitution of India. 2. According to Section 2(17) of CGST Act "business" includes- (a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) Any activity or transaction in connection with or incidental or ancillary to sub clause (a): (c) Any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) Supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) Provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) Admission, for a consideration, of persons to any premises; (g) Services supplied by a person as the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retarded. (xxvii) Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. (xxviii) Public distribution system. (xxix) Maintenance of community assets. The project is a Government funded project. The extract of Project Administration Manual is as follows: 27. the summary financing plan is given in Table 6 Table 6: Summary Financing Plan Source Amount ($ million) Share of Total (%) Asian Development Bank Ordinary capital resources (regular loan) 150.0 62.5 Government 90.0 37.5 Total 240.0 100.0 Source: Asian Development Bank. 28 ADD will finance civil works and equipment at GSP and ITIs, consulting services (e.g.. consulting services for DSC, MAC, ITE, GIZ. etc). PMU core management team, training-related expenses, and contingencies The government will cover civil works at GSP and GSP-City Campus, equipment at GSP and GSP-City Campus, trainers' salaries, social marketing, recurrent costs, and contingencies. The government funding will also cover interest and commitment charges It is clearly evident from above that the activity performed by the applicant is in line with the duties entrusted in the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution: As per point no. 3 of ground no. 1, the activity of imparting Technical and Vocation education is covered by article 243G of the Constitution. It is clearly evident from the above that even if we consider the liability of reverse charge on import of service by Government, the rate of tax applicable on the service provided by ITEES, Singapore to the applicant will be nil. The appellant was called for personal hearing on 10.01.2020. Mr. Piyush Wohra CA appeared on behalf of appellant. He reiterated all the issues again. He vehemently argued that his basic question was about taxability of the transaction whereas AAR discussed the matter only with respect to entry number 10 of Notification no. 9/ 2017 IGST (Rate) and ignored the plea taken about constitutional duties. 7. DISCUSSIONS AND FINDINGS- 1. Appellant has described his activity in the Facts of the case and Statement of Facts: a. The Government of Madhya Pradesh (GOMP) is implementing the Madhya Pradesh Skills Development Project (MPSDP) with the support of Asian Development Bank (ADB). b. The project for the Establishment of Center for Occupational Skills Acquisition within the Global Skills Park (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nceded: - Sec 5(3) of IGST Act, 2017 read along with Notification No. 10/2017 Integrated Tax (Rate) dated 28th June 2017 provide for the liability of tax to be paid on reverse charge mechanism in case of Import of service by any person located in the taxable territory. Once liability of reverse charge is imposed, all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Appellant, though has not mentioned but his activity is covered under entry number 1 of the notification as Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. 6. Appellant in his application sought relief through notification 9/2017 IGST (rate) dated 28.06.2017 and referred its entry number 10. He argued that by virtue of this entry his receipt of services for the abovementioned activity would be exempt. The relevant entry is Services received from a provider of service located in a non-taxable territory by- (a) the Central Government, State Government, Union territory, a local authority, a governmental authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority or a Governmental authority 11-or a Government Entity] by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. 13. Appellant has argued that to qualify for this entry the requirements are 1. Pure service: The activity performed by ITEES is pure service in nature. (Consultancy service) 2. Recipient of service: The appellant is State Government department/Government entity. 3. Nature of service: The nature of service provided by the supplier is in relation to Technical and Vocational Education Training Program of the Government of Madhya Pradesh. 4. Function entrusted under constitution: As per point no. 3 of ground no. 1, the activity of imparting Technical and Vocation education is covered by article 243G of the Constitution. After taking us through entry 18 of ELEVENTH SCHEDUEL as per Article 243-G of Constitution of India which is "(xviii) Technical training and vocational education" the suave diligent Chartered Accountant says "It is evident from the above that even if we consider the liability of reverse c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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