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TMI Blog2024 (7) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... YAPRIYA, AND SMT. A. VALLI, MEMBER 1. Any appeal against this Advance Ruling order shall lie before the Tamilnadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/ TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed, is communicated. 2. In terms of Section 103 (1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling. (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Advance Ruling obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as an Act) ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt application before the Authority for Advance Ruling seeking an Advance Ruling on the question defined under Section 97 (2) (d) of the Central Goods and Services Tax Act, 2017 ('CGST Act') which is as under: (d) admissibility of input tax credit of tax paid or deemed to have been paid; 5. On interpretation of law, the applicant states that - Eligibility to avail Input Tax Credit 5.1. The applicant submitted that as per Section 16 of the Central Goods and Services Act, 2017 ('CGST Act') Tamil Nadu Goods and Services Act, 2017 ('TNGST Act'), Inputs/ input services should be used or intended to be used in the course or furtherance of the business. The relevant text of Section 16 is hereby reproduced below for reference:- 16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. 5.2. The applicant stated that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been made in the course of its business. In furtherance of: The Oxford dictionary explains the meaning of the term 'furtherance' as 'the advancement of a scheme or interest'. Thus, if an activity is undertaken for the advancement of business it will be treated as in furtherance of business. 5.5. The applicant undertakes that any Input Tax Credit availed would be in due compliance with meeting the conditions laid out in Section 16 (2) of the CGST Act, as reproduced below. Therefore, the question of credit eligibility is restricted to Section 16 (1). (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the term businesses' cited supra. ii) That the applicant proposes to avail the subject services with the motive of identifying potential candidates for hiring as employees, thereby further its business operations. Hence, the said procurement of services is clearly for use or intended to be used by the Applicant in the course or furtherance of business. Credit not blocked 5.7. The applicant further submitted that Section 17 (5) of CGST Act TNGST Act provides the cases where ITC is admissible. Relevant text of Section 17 (5) is hereby reproduced below for reference: (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely: (a) motor vehicles and other conveyances except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where (A) the Government notifies the services which are obligatory for an employer to provide to its employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , realizing business needs and to achieve the true purpose of credit flow in an indirect tax framework, the strength of the nexus theory was diluted to allow credit on procurements as long as they were in connection of the business. 5.13. The applicant submitted that the GST Law, seen as a culmination of the erstwhile regime and learnings from the numerous judicial precedents therein, has therefore largely simplified the provisions on credit availment, staying true to the objective of preventing cascading effect of That in this light, the industry ushered in the GST regime With earnest belief of the credit provisions enhancing business commercials as also greatly expanding the tax net by bringing earlier unorganized players into the organized sector, 5.14. The applicant submitted that the Indian Staffing Federation is the apex body representing the Staffing industry / Private Employment Services that is authorised to discuss with government agencies and other trade bodies on behalf of the staffing industry/ private employment services. The JSF constitute of several professional organized staffing companies, including the proposed vendor(s) of the Applicant. 5.15. That as cited in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017. 6.2 The Joint Commissioner (ST), Intelligence-Il has also remarked that no proceedings is pending in their jurisdiction. 6.3 The Central authority has not reported anything, hence it is construed that there is no pending proceedings the applicant on the issues raised by the applicant in the Advance Ruling application. 7. The Applicant, was given an opportunity to be heard in person on 09.01.2024. Shri. Aravind Baskaran, Chartered Accountant and Abhishek Ganahari, Chartered Accountant who are the Authorized Representatives of the Applicant appeared for the hearing and they reiterated the submissions made in their application. Further they submitted additional submissions, wherein sample services agreement and sample copy of invoices were submitted. The members requested them to submit input and output services rendered / to be rendered by the applicant, for which it was stated that they would submit at the earliest. 8. Additional Submission The applicant vide letter dated 20.02.2024 made additional submissions against the advance ruling application. They submitted that with regard to certain documents sought for perusal by the members of the advance ruling during the personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (Client Name) and Quess Corp Ltd.. The terms and conditions of this Agreement will govern this SOW (Scope of Work). Any capitalized term used but not defined in this SOW shall have the same meaning as set out in the Agreement. To the extent that this Statement of Work is inconsistent with or conflicts with the Agreement, this Statement of Work shall amend and supersede those inconsistent or conflicting terms of the Agreement. In all other respects, the Agreement shall remain in full force and effect according to its terms. The SOW is effective from 23rd May 2022 ( SOW Effective Date ) and comprises the following and any attachments/ schedules hereto. 1 SERVICE REPRESENTATIVES OF THE PARTIES: Client Representative Details: Vivin Anto Company Representative Details: 2. OBLIGATIONS OF THE PARTIES TO THE AGREEMENT a. Recruitment Client will provide clear specifications for the nature of the services required from the Company, in order to help source and recruit the Associates. Company shall ensure that the Associates have cleared the Company's internal selection processes and meet Client's requirements as specified under the respective SOW. b. Placement Client will intimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Any justifiable expense incurred by the Company under this SOW and mutually agreed by and in between the Company and Client, will be reimbursed by Client. Further, Client agrees to reimburse the associates expenses, if any i. Medical Expenses Upon Client's discretion and instruction, a medical checkup for every Associate can be arranged, expenses of which will be borne by the Client. j. Background verification Upon Client's discretion and instruction, background verification for every Associate can be arranged, expenses of which will be borne by the Client. k. Industry-specific Checks Upon Client's discretion and instruction, Company shall preform License/ permit verifications and fingerprinting for certain positions. Client agrees to pay the Company all related costs associated with providing such Services plus an administrative fee. I. Reports Company agrees to provide the reports pertaining to the Associates, as mutually agreed between the Parties from time to time. m. Additional Services Company may provide additional services beyond its express obligations under this Agreement at the Client's request. The charges for these services will be at the rate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly considered the submissions made by the applicant in their application, submissions made during the personal hearing and the comments furnished by State Tax jurisdictional officer. 10.2 The applicant submits that they are engaged in the business of providing Information Technology (IT) and Information Technology Enabled Services (ITeS) for healthcare sector. They offer business process outsourcing, applications services, and robotic process automation tools to healthcare providers, payers and related service providers. That being in the IT/ITes space, human resources form the backbone of their activities and technically qualified resources is a key to the operations of the business of the applicant. They further state that the job market is volatile and it is found extremely onerous to identify, train, recruit and retain suitable resources. Therefore, the applicant is considering hiring the service of professional contract-staffing firm(s) to avail certain human resource management and related services. Such firm(s) ('Staffing Firm') would issue tax invoices on the applicant towards the services rendered, along with applicable Goods and Service Tax. The services rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the said supply; and (iv) He has furnished the return under section 39 (v) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income tax Act, 1961, the input tax credit on the said tax component shall not be allowed In the instant case the above conditions (i) to (iv) are to be fulfilled by the applicant to be eligible for claiming input tax credit. The condition mentioned at sl no (v) is not relevant in the instant case as the same pertains to availment of input tax credit on capital goods and plant and machinery, whereas the supplies to be received by the applicant are contract staffing services. 10.6, Further we agree with the applicants' submission that the GST paid by the applicant on availing contract staffing services is not a blocked credit as per section 17 (5) (b) (iii) as below: (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18 input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons having approved seating capacity of not more than thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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