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TMI Blog2024 (8) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... y of Maldives. In absence thereof, it is difficult to give seal of approval to the finding that the works contract services were rendered at Maldives by independent/separate legal entity. For these cumulative reasons, it is constrained to hold that the petitioner and respondent No.2 had fixed establishments at Addu city, Maldives and the petitioner was re-registered at Addu which is evident from the re-registration certificate. Scope of Judicial Review - HELD THAT:- The parties have rightly placed reliance on the judgment of Supreme Court in the case of APPROPRIATE AUTHORITY AND ANOTHER VERSUS SMT. SUDHA PATIL AND ANOTHER [ 1998 (11) TMI 124 - SUPREME COURT] . As per the said judgment, the interference can be made if (i) High Courts come to the conclusion that in arriving at the conclusion, the authority has failed to consider some relevant material (ii) has considered some extraneous irrelevant materials, (iii) findings are based on no evidence and (iv) the finding is such that no reasonable man can come to such a conclusion on the basis of which the finding has been arrived. Location of recipient of services and Location of supplier of services - HELD THAT:- Admittedly the locati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government of India (GoI) entered into Memorandum of Understanding (MoU) with Government of Maldives for constructing a Police Academy funded by the GoI. In turn, the GoI appointed respondent No.2 i.e., National Buildings Construction Corporation Ltd., (NBCCL) to execute the construction of Police Academy by itself or through a contractor. NBCCL awarded contract to the petitioner. 3. In order to complete the work at Republic of Maldives (Maldives), the NBCCL set up an office and in turn the petitioner also set up their office at Addu city, Maldives. The Authorized Dealer Bank {Oriental Bank of Commerce (OBC)}, which is acting on behalf of Reserve Bank of India approved the establishment of branch office of petitioner in Maldives. 4. The stand of the petitioner is that it exported various goods to its Maldives office. The turnover of such goods was declared under the GST as zero rate supplies . The petitioner treated the consideration received towards works contract service of construction which was completely executed in the territory of Maldives through their Maldives establishment as outside the scope of GST laws of India. Respondent No.2 did not pay GST on the construction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement can be to NBCCL or its designated contractor/sub-contractor or supplier. The NBCCL opened its office at Addu city, Maldives, as is evident from the document dated 16.12.2020 (Annexure-3) filed with the counter of respondent No.2. Another contract filed with the rejoinder is referred to show that it is entered into between NBCCL and the petitioner and clause 18.2 of this contract makes it clear that taxes, duties and levies shall be reimbursed by NBCCL to the contractor/petitioner. 8. Learned counsel for the petitioner submits that the construction of ISLES was completed and the same was inaugurated in the presence of high dignitaries of India and Maldives. Photographs of the event are placed on record with the counter of respondent No.2. It is submitted that when contract was entered into between GoI and Government of Maldives and work started, service tax regime was holding the field. The GST law came into force with effect from 01.07.2017. 9. In furtherance of the petitioner s letters dated 04.07.2017 and 22.08.2017, NBCCL wrote a letter dated 13.04.2018 to the petitioner which was filed with the counter of respondent No.3. Learned counsel for the petitioner, by taking this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner through his fixed establishment at Addu city, Maldives. The location of the petitioner/supplier for present purpose must be the location of fixed establishment at Addu city and not at the registered office at Hyderabad (Telangana). 13. The alternative submission of learned counsel for the petitioner is that even assuming that the petitioner is covered under the GST law of India and he is required to pay tax based on it, in view of terms of contracts dated 11.03.2015 and another filed with the rejoinder, the tax amount is required to be reimbursed by the GoI to NBCCL and in turn by NBCCL to the petitioner. Thus, it is an arrangement because of which money will go from one pocket to another pocket of the Government. The petitioner cannot be made to suffer and pay the tax under the GST law of India for the activity carried out in the Maldives. 14. It is further submitted that the petitioner has already paid taxes under the GST law of Maldives. The object behind bringing GST and IGST Acts is to levy tax for the activity which takes place within the territory of India and not outside the territory of India. Lastly, on the basis of judgment of Abhishek Kumar v. NBCCL 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) of the CGST Act, which is pari materia to Section 2 (7) of the IGST Act, is referred to highlight the definition of fixed establishment . The definition of person mentioned in Section 2 (84) of the CGST Act is also referred to contend that the definition of person and definition of company and foreign company under Section 2 of the Companies Act, 2013 shows that a company is company incorporated in India and foreign company is company incorporated outside India are separated persons under provisions of the CGST Act and hence, both are separate persons and separate legal entities. Hence, registered place of business of the petitioner in Maldives cannot be considered as fixed establishment of M/s. Sri Avantika Contractors (I) Limited. 18. Furthermore, Sri Dominic Feranandes, learned Senior Standing counsel for CBIC, submits that no doubt the work performed by the petitioner at Maldives is based on works contract as per Section 2 (119) of the CGST Act and relates to contract of services, yet works contract is essentially a contract. The contract was between the petitioner and respondent No.2. The contract was entered into between two parties located in India which means the locatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... location of the recipient must be treated to be at New Delhi and cannot be at Addu city of Maldives. It is faintly argued that the petitioner has only challenged the OIA/appellate order and not assailed the order dated 05.08.2021 (Annexure P-18) in specific passed by the Advance Ruling Authority. Contention of respondent No.2:- 23. Sri S.Dwarakanath, learned Senior Counsel appearing for respondent No.2, at the outset, fairly submits that respondent No.2 is sailing with the petitioner in all respects, except on the aspect of reimbursement of tax to the petitioner by respondent No.2. The learned Senior Counsel urged that the impugned advance ruling (Annexure P-18) is cryptic in nature and does not deal with certain statutory provisions of the GST/IGST Act. For example, the impact of both the Explanations appended to Section 8 of the IGST Act has escaped notice of the said authority. The appellate authority confirming the advance ruling, although referred about certain statutory provisions, did not deal with it in correct perspective. The impugned orders will make the petitioner almost remediless so far in-house mechanism under the aforesaid Acts are concerned. Once advance ruling is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s : 27. In rejoinder submissions, the learned counsel for the petitioner submits that the document dated 16.12.2020 (Annexure P-3) filed with counter of respondent No.2 shows that between February, 2020 to November, 2020, 436 persons worked with respondent No.2 at Addu city of Maldives. Thus, this is also a relevant factor for determining whether there exists a fixed establishment in Maldives. 28. Apart from this, to counter the argument of the Revenue relating to filing of zero rated returns , it is urged that this is not the reason for passing the impugned order by Advance Ruling Authority and Appellate Authority. Reliance is placed on Constitution Bench judgment of Supreme Court in the case of Mohinder Singh Gill v. The Chief Election Commissioner 1978 (1) SCC 405 , to canvas that validity of order of statutory authority is to be judged on the basis of grounds mentioned therein and same cannot be supplemented by filing counter affidavit in the Court. 29. By placing reliance on another judgment of Supreme Court in the case of Jayaswal Neco Ltd. v. Commissioner of Central Excise 2015 (322) E.L.T 587 (SC) , it is submitted that there cannot be any estoppel against the law. Merely b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhoo, Addu City, Republic of Maldives. Clause 1.1 of the agreement dated 08.07.2016 entered between respondent No.2 and the petitioner reads as under: 1.1 SCOPE OF WORK: NBCC has awarded the contract to M/s Shri Avantika Contractors (1) Limited for the setting up of the Institute for security and Law Enforcement Studies (ISLES) at ADDU city in Maldives on the terms and conditions contained in its letter of Award No.NBCC/GM (CPG)/2016/817 dated: 04.06.2016 and the documents referred to therein. The award has taken effect from 04.06.2016 i.e. the date of issue of aforesaid letter of intent. The terms and expressions used in this agreement shall have the same meanings as are assigned to them in the Contract Documents referred to in the succeeding Article. 34. Similarly, Clause 2.5, 6 (e) and 8.0 of the agreement entered into between MEA and NBCCL are worth mentioning, which read as under: 2.5: The Executing Agency shall invite tenders, on behalf of the Employer, for awarding the different work packages of the Project. For this, it shall prepare the tender documents comprising of the technical specifications BOQ, General Terms and Conditions, Special Conditions etc. Tender(s) shall the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maldives, establishment of site office/establishment by the petitioner and respondent No.2 at Addu city of Maldives and the construction of ISLES pursuant to works contract services had taken place within the territory of Maldives. In this backdrop, the interesting conundrum is whether the Advance Ruling Authority and Appellate Authority were justified in giving a ruling against the petitioner. 39. As noticed above, the parties are at loggerheads on the question whether the establishment/site office maintained by the petitioner and respondent No.2 fall within the ambit of Section 2 (7) fixed establishment of the IGST Act. The parties have also taken diametrically opposite stands on the question relating to location of recipient of services and location of supplies or services . 40. These aspects deserve serious consideration. However, before dealing with the statutory provisions, we deem it proper to briefly state reasons assigned by learned Appellate Authority in OIA dated 16.07.2022 (Annexure P-1) for ruling against the petitioner. The contention of the petitioner was not accepted because (i) as per Clause 3.6 of the agreement, the petitioner will receive consideration from respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act. The said provision reads as under: 2(7) fixed establishment means a place (other than the registered place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs. (Emphasis Supplied) 42. A bare perusal of this provision makes it clear that the necessary ingredients to bring the establishment within the definition of fixed establishment are existence of (i) establishment with sufficient degree of permanence, (ii) suitable structure in terms of human and technical resources to receive or supply services and (iii) such establishments must be a place other than their registered place of business. In our considered opinion, the expression registered place means registration under Indian laws. The registration under Maldivian law is not covered under Section 2 (7). The necessary ingredients to treat the establishment of the petitioner and respondent No.2 are available which brings it within the definition of fixed establishment because there existed sufficient degree of permanence of such establishments which were used for several y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate of Re-registration was obtained by the petitioner as per the requirement of Section 94 (a). It is clear like noon day that same company registered outside Maldives (in India) got re-registered. Thus, it is difficult to hold that merely because petitioner got Certificate of Re-registration under the Maldivian law, the Maldivian entity became a separate legal entity or person. 47. We say so for yet another reason. If this finding given in OIA is accepted that the petitioner and re-registered Maldivian entity are two separate legal entities, it will be difficult to understand under which authority/contract the said independent legal entity of Maldives was permitted to execute the work. Admittedly, no contract is entered into between respondent Nos.1 and 2 with the re-registered entity of Maldives. In absence thereof, it is difficult to give seal of approval to the finding that the works contract services were rendered at Maldives by independent/separate legal entity. For these cumulative reasons, we are constrained to hold that the petitioner and respondent No.2 had fixed establishments at Addu city, Maldives and the petitioner was re-registered at Addu which is evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has to be looked in a holistic manner and the promise to deliver has been made by M/s Avantika Contractors (1) Limited, who will be held responsible in the event of any non-performance of the agreement. The discussion from where the individual goods and services involved in the works contract are received is immaterial in determining the Location of the Recipient, instead, the place where the total service (works contract service), of agreeing to perform has been received will be the location of recipient of service. (Emphasis Supplied) 52. In para Nos.14 of same order, it is mentioned that since supply, the agreement to perform is being made from the place of business for which registration has been obtained i.e., Hyderabad, location of supplier of service will be Hyderabad. Same parameter is applied for recipient in para 22. Para No.14 Para No.22 In this case, the supply, the agreement to perform is being made from the place of business for which registration has been obtained (i.e. M/s Avantika Contractor (I) Limited, 401/A wing D.No.6-3-352/2 3, Astral height complex, road No.1, Banjarahilla, Hyderabad 500034). Hence, this location, i.e. M/s.Avantika Contract (I) Limited with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier of services . The relevant portion reads as under: 2(15) location of the supplier of services means:- (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment. (Emphasis Supplied) 55. A comparative reading of definitions of location of recipient of services and location of supplier of services shows that only difference between two provisions is relating to receiving and making the supply . Otherwise, provisions are identically worded. For the simple reason mentioned in preceding para interpreting Section 2(14) of the IGST Act, we hold that the location of the supplier is covered by Clause (b) of Section 2(15). The supply is certainly made through fixed establishment at Maldives, which is other than the place of registration of business of the petitioner i.e., Hyderabad. Hence, in our opinion, the Appellate Authority erred in interpreting and understanding the definitions of location of recipient and suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in India and any other establishment outside India. Explanation 2 further provides that if the person carrying on a business has a branch or agency or representational office in any other territory, it shall be treated as an establishment in that territory. This provision has totally escaped notice of learned Advance Ruling Authority and Appellate Authority. 59. A combined reading of Explanations 1 and 2 shows that if the petitioner had any establishment in Maldives, it must be treated to be his establishment in that territory and such establishment shall be treated as establishment of distinct person. Once such fixed establishment is treated to be as establishment of distinct person and treated as his representational office in other territory, it will be clear that the work contract services performed by the petitioner are relating with the establishment of the petitioner in India and his fixed establishment in Maldives is his other establishment or representational office . 60. In the peculiar facts of this case, distinct person mentioned in Explanation-I will not mean that petitioner s Maldivian establishment is a separate and independent legal entity as projected in impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the place of supply of services where the location of supplier and recipient is within the territory of India. Except proviso to sub-section (3) of Section 12, the entire Section 12 deals with the aspect of determination of place of supply of services where location of both i.e., recipient and supplier is within India. The proviso to Section 12(3) was interpreted by learned Appellate Authority in the line of his finding that Avantika Contractors (I) Limited, Maldives, cannot be treated as fixed establishment . The re-registered body of the petitioner at Maldives is a different legal entity than the petitioner and Sections 2(14)(a) and (15) (a) will be applicable for deciding the location of supplier and recipient . 64. We have already disapproved the said reasoning given by the learned Appellate Authority. Still, it is relevant to carefully read the said proviso on which heavy reliance is placed by learned Appellate Authority and by Sri Dominic Fernandes, during the course of hearing. The said proviso, in no uncertain terms, makes it clear that if location of immovable property is outside India, the place of supply shall be the location of recipient. 65. We will be failing in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o was inserted with above mentioned purpose and its literal interpretation does not make it redundant or otiose. 68. In the peculiar factual backdrop of this case, admittedly the location of immovable property i.e., ISLES is located in Maldives/outside India. Hence, the place of supply shall determine the location of recipient . As analysed above, the place of supply of services is at Addu, Maldives. The location of recipient is already interpreted by us by holding that as per Section 2(14)(b), it will be the fixed establishment of respondent No.2 which will be the location of recipient. Thus, even as per the aforesaid proviso to Section 12(3), we are unable to give our stamp of approval to the OIA passed by the Appellate Authority. 69. Section 13 of the IGST Act deals with place of supply of services where location of supply and recipient is outside India. The relevant portion reads as under: 13. Place of supply of services where location of supplier or location of recipient is outside India: (1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity is to be examined on the basis of reasons mentioned therein and it cannot be supplemented by filing counter in the Court. (ii) Filing of an incorrect return will not operate as estoppel in view of the judgment of the Supreme Court in Jayaswal Neco Ltd. (supra). 72. Another argument faintly advanced by the learned Senior Standing counsel for CBIC was that the singular challenge in this petition is to the OIA dated 16.07.2022 and original order of advance ruling dated 05.08.2021 is not called in question. We do not find any force in this contention. The order of advance ruling stood merged in the OIA in view of doctrine of merger . Thus, if order dated 05.08.2021 (Annexure P-18) is not separately challenged, it will not cause any dent to the relief claimed. 73. In view of foregoing analysis, we are unable to countenance OIA dated 16.07.2022. Resultantly, the said order and as a consequence, the merged order dated 05.08.2021 are set aside. The respondents shall reimburse the amount of GST, interest and penalty (if any) deposited by the petitioner to him in respect of construction services provided in Maldives as per contract dated 08.07.2016 within 90 days from the date of produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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