2018 (7) TMI 1334 – AUTHORITY FOR ADVANCE RULINGS HARYANA – 2018 (15) G. S. T. L. 132 (A. A. R. – GST) – Place of supply – sourcing (on a worldwide basis)) of goods from India – export or not – sourcing (on a worldwide basis)) of goods which includes wearing apparel, shoe & accessories and fabric – sub-contract – refund of GST paid on inputs and input services used in export of services – Jurisdiction.
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Taxability of above stated services provided by Esprit India to its associate concern in Hong Kong EDCFE under GST regime? – Held that:- As per Explanatory Notes to the Scheme of Classification of Services read with N/N. 11/2017-Central Tax (Rate) dt. 28/07/2017 (as amended), the services enumerated by the applicant in tabular form as given above, qualify as taxable services – taxability upheld.
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Whether the above stated services provided by Esprit are covered under Export of Services having Zero rated taxability? – Jurisdiction – Held that:- Whether a transaction is “export
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es made thereunder is the competent authority for the same – However, with regard to giving Advance Ruling on this question, it is observed that as the earlier question relating to export of services is dependent upon the definition of “place of supply”, which is out of jurisdiction of the authority, this instant question too, being corollary to earlier question, cannot be taken up for pronouncing any ruling due to lack of jurisdiction.
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Ruling:- The services provided by Esprit India to its associate concern in Hong Kong EDCFE are taxable supplies.
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The above stated services being taxable supplies, the question as to whether they qualify as “export of services” and accordingly “zero rated supply”, is out of jurisdiction of this authority.
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The same proposition applies to the question as to whether Esprit India is eligible for seeking refund of GST for the taxes paid on input services or goods, due to lack of jurisdiction. – AAR No. HAR/HAAR/R/2018-19/6 Dated:- 11-4-2018
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. Under the agreement, Esprit is appointed by EDCFE to provide services to EDCFE in relation to goods and merchandise including wearing appreal, shoes & accessories and. A brief description of the functions/responsibilities of EDCFE and Esprit Germany and Esprit India is listed below; S.No. Functions/Activities Role of EDCFE/Esprit Germany Role of Esprit India 1. Market research No role Esprit India conducts market research to understand market dynamics, gather pricing information from different suppliers and advise on the best available combination of price, quality and delivery of the goods for Esprit Germany. 2. Purchase of goods and trademark protection Esprit Germany directly purchases goods from Indian suppliers Esprit India performs its functions as a sub-sourcing contractor of and does not purchase the goods or trade its own name. It assists in protection of trademark which includes ensuring that suppliers execute all trademark confirmation letters, comply with the trademar
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dopted during manufacturing, stock keeping in warehouse and transportation Esprit India based on the guidelines received from EDGE conducts quality checks at various stages of production. it also checks whether the goods meet the specification, quality, delivery time, and other requirement of Esprit Germany. 6. Logistics Products are dispatched by the suppliers to Esprit Germany. Esprit India makes logistics arrangement for the goods in accordance with the instructions of Esprit Germany received through EDCFE and assure that all documents related to shipment of the goods Esprit Germany are proper. 7. Contract conclusion No Role Esprit India does not participate in activities which bring supplier and Esprit Germany into binding contract of purchase of goods. 8. Involving and payment Suppliers directly invoice to Esprit Macao and it makes payment directly to the suppliers No role in the invoicing and payment process as all invoices are sent directly by suppliers to Esprit Germany without
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ided by Esprit India to ITS associate concern in Hong Kong EDCFE under GST regime, it is observed that as per as per Explanatory Notes to the Scheme of Classification of Services read with Notification No. 11/2017-Central Tax (Rate) dt. 28/07/2017 (as amended), the services enumerated by the applicant in tabular form as given above, qualify as taxable services, in the following manner and chargeable to GST under forward charge. S.No. Functions/Activities Role of EDGE/Esprit Germany Role of Esprit India SAC & Description Taxability 1. Market research No role Esprit India conducts market research to understand market dynamics, gather pricing information from different suppliers and advice on the best available combination of price, quality and delivery of the goods for Esprit Germnay. 998371 Market research services. This service code includes market analysis, analysis of competition and the behaviour of consumers, use of research monographs, statistics, econometric models surveys, e
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iers EDCFE provide guidelines and instructions to Esprit India regarding vendor selection process Esprit India responsible for collecting data for the purpose of vendor evaluation. Esprit India undertakes vendor evaluation on various parameters including experience, reputation, quality of product, price etc. based on which the vendor is selected. Esprit India is also responsible for maintaining the existing and new supplier base in India. 998599 support Other services n.e.c. This service code includes business brokerage and appraisal services other than for real estate; Taxable under forward charge @ 18% [S.No. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dt. 28.07.2017] 4. Negotiation with the suppliers Esprit Germany directly negotiate and contract with supplier in respect of goods sourced from India. Esprit India only communicates the terms and conditions to the extent of instructions and requirements received from Esprit Germany {through EDCEF) but is not involved in negot
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ax (Rate) dt. 28.07.2017] 6. Logistics Products are dispatched by the supplier to Esprit Germany. Esprit India makes logistics arrangement for the goods in accordance with the instructions of Esprit Germany received through EDCFE and assure that all documents related to shipment of the goods Esprit Germany are proper. 998311 Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management This Service code includes services provided in relation to logistics management. Taxable under forward charge @ 18% [S.No. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dt. 28.07.2017] 7. As regards the question of above stated services provided by Esprit India, also being covered under export of services having zero rated taxability, it is observed that zero rated supply has been defined under Section 16(1) of the integrated Goods and Services Act, 2017, as under: zero rated supply means any of the following supp
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bath supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. Further, as per Section 2(6) of the IGST Act, 2017, export of services is 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 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; From the above, it is evident that whether a transaction is export of services or not, is dependent upon the tact as to whether the place of supply of service is out of India or not. Consequently, if the advance ruling authority proceeds ahead with examination and consideratio
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supply (which is not among the issues which can be decided by AAR], the question cannot be taken up by the authority for lack of jurisdiction, 8. As regards refund of GST paid on inputs and input services used in export of services, is dependent upon the fulfillment of conditions as prescribed under Section 2(6) and Section 16(1), both of the Integrated Goods and Services Tax, 2017. Such refund claims merit to be examined in terms of provisions of Section 54 of the CGST/HGST Act, 2017 and rules made thereunder. The proper officer under the CGST/HGST Act, 2017 and roles made thereunder is the competent authority for the same. However, with regard to giving Advance Ruling on this question, it is observed that as the earlier question relating to export of services is dependent upon the definition of place of supply , which is out of jurisdiction of the authority, this instant question too, being corollary to earlier question, cannot be taken up for pronouncing any ruling due to lack of j
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