2018 (12) TMI 650 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Levy of GST – zero rated export supply or not – export of service – photography service of diamonds – diamonds received on returnable basis – interstate supply or intrastate supply – Held that:- There is no doubt that the supply of service in the present case satisfies conditions at (i) and (ii) of Section 2(6) of the IGST Act. However, to qualify as an ‘export of services’ all the conditions must be satisfied simultaneously
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As per condition at (iii) above, which pertains to place of supply of service and that the place of supply of service shall be outside India. Section 13 of the IGST Act contains provisions for determining the place of supply of services where the location of the supplier of the services or the location of the recipient of services is outside India – The place of supply of service shall be determined as per the provision contained in section 13 of the IGST Act. The said section has been div
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clause, recipient of service who want to avail services has to make goods physically available on direct or indirect directions to the service provider and it does not matter who owned the goods.
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It is the cordial rule of interpretation that where the language used by the legislature is clear and unambiguous then the plain and natural meaning of the words should be supplied to the language used and resort to any rule of interpretation to unfold the intention is permissible only where there is any ambiguity.
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There is no need that the goods physically required for rendering services must be owned by the recipient of the services, on the other hand it is sufficient for the recipient to make them physically available to the service provider for rendering services – Thus in this case the event of photography services pertaining to diamonds made physically available by the recipient of services to the provider of services is over and the service is clearly provided in India wher
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the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by SEGOMA IMAGING TECHNOLOGIES INDIA PRIVATE LIMITED, the application seeking an advance ruling in respect of the following questions. 1. Whether the supply of photography service is liable to SGST under the Maharashtra Goods and Service Tax Act, 2017 (MGST Act, 2017) and CGST under Central Goods and Service Tax Act, 2017 (CGST Act) or IGST under Integrated Goods and Service Tax Act, 2017 (IGST Act, 2017) 2. Or is it a zero rated export supply within the meaning of Section 2(23) r/w Section 2(6) of the IGST Act, 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unles
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te www.jamesallen.com. As per agreement between R2 Net and customers of R2Net, R2NET lists on the system only those diamonds that are photographed with R2Net s proprietary Diamond Display Technology. Customer agrees to send its diamonds and/or gemstones to be photographed in R2Net s photography centers on a regular basis. R2Net has appointed Segoma Israel for photography service. Intern, Segoma Israel has made agreement with Segoma India to do photography service. Customers of R2Net give diamond on returnable basis to Segoma India. Segoma Israel does not have role in receiving diamond. Segoma India issues memo of receipt of diamonds to customers of R2Net. Segoma India takes photos of diamonds and upload photos of diamond on software of Segoma Israel. Segoma India charges Segoma Israel for providing above service of photography. Segoma Israel makes payment in convertible foreign exchange to Segoma India. Segoma India does not give copy of photos to customers of R2Net and does not charge
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service are not merely establishments of a distinct person in accordance with explanation 1 in section 8 of IGST Act 1.3. Testing of conditions Condition 1: Based on above facts, Segoma India is located in India. Condition 2: Segoma Israel is located outside India. Condition 3: Based on above facts, diamonds are physically required to do photography service. Section of IGST Act, states that the place of supply of service supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services in order to provide the service shall be the location where the services are actually performed. Segoma India performs photography service in India. However, diamonds are not owned by Segoma Israel. As per section 13(3)(a) of IGST Act recipient of services should make available physically goods to service provider. However, in above transaction of photography, diamonds are made available by third party. Segoma Israel does not have ro
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ing on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. Based on above facts, Segoma India is established under India company Act and it is not branch, agency or representational office of Segoma Isreal. So Segoma India is distinct person for section of 2(6)(v) of IGST Act and not covered under explanation 1 of section 8 of IGST Act. 1.4 Conclusion on Condition of export If all following conditions are satisfied then only transaction can be considered as export of service: Conditions Satisfy or not The supplier of service is located in India Yes The recipient of service is located outside India Yes The place of supply of service is outside India Yes The payment for such service has been received by the supplier of service in convertible foreign exchange Yes The supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with explanat
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ferred as Segoma India) is an Indian private limited company set up under Indian Companies Act. Segoma India is 100% Subsidiary of Segoma Ltd (hereinafter referred as Segoma Israel) which is based in Israel. Segoma Israel is subsidiary of R2Net which is based in US R2Net has appointed Segoma Israel for photography service. For all over the world, Segoma Israel has made agreement with Segoma India to do photography service in India. Segoma India provides Diamond Photography Services. R2Net has agreement with vendors for listing Diamonds online on website www.jamesallen.com. . R2Net is based in USA. R2Net has customer base in USA. As per agreement between R2Net and vendors of R2Net, R2NET lists on the system only those diamonds that are photographed with R2Net s proprietary Diamond Display Technology or Segoma photography centres. Vendor agrees to send its diamonds and/or gemstones to be photographed in R2Net s photography centers or Segoma photography centres on a regular basis. It is a
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by Segoma India by compressing 500MB heavy size images to a single Image. Segoma Israel further processes and makes the image more compatible. R2Net further processes the images after receiving from Segoma Israel. Point 16 Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of the aforesaid questions (i.e. applicant s view point and submission on issues on which the advance ruling is sought) 1. Export of service 1.1. As per section 16 of Integrated Goods and Service Tax Act, 2017 (hereinafter referred as IGST Act ), zero rated supply means any of following supplies of goods or services or both namely; – (a) export of goods or services or both 1.2. Condition of export of service As per section 2(6) of IGST Act, export of services means the supply of any service when, The supplier of service is located in India i. The recipient of service is located outside India ii. The place of supply of service is outside India iii. The payment for
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ds to service provider. However, in above transaction of photography, diamonds are made available by third party. Segoma Israel does not have role in receiving diamond. Segoma India issues memo of receipt of diamonds to vendors of R2Net. Accordingly, section 13(3)(a) of IGST Act should not be applied in above transaction. Then as per section 13(2) of IGST Act, the place of supply of services except the services specified in sub-section (3) to (13) shall be the location of the recipient of services. Service recipient is located outside India. Accordingly, place of supply of service will be outside India. Condition 4: Segoma Israel makes payment to Segoma India in convertible foreign exchange. Condition 5: as per section 2(6)(v) of IGST Act, 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. Explanation 1 of section 8 of IGST Act, which is as follow: Where a person has an establishment in
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a. The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services: Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. 3) The place of supply of the following services shall be the location where the services are actually performed, namely: – (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied i
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R2Net s or Segoma photography centres on a regular basis . Segoma has no relation with diamond vendors or R2Net it only provides photography services to Segoma Israel as per agreement with Segoma Israel. Photography of Diamonds is a service in respect of goods which are required to be made physically available by recipient of service (directly to Segoma Israel). Section 2 (93) of CGST Act, 2017: Recipient of Supply of goods or services or both, means- (a) Where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) Where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of goods is given or made available; and (c) Where no consideration is payable for the supply of service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient
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goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account; As per above definition Intermediary does not include a person who supplies the goods or services on his own account. Segoma India provides photography services to Segoma Israel and Segoma Israel has contract to provide service to R2Net hence Segoma India provides service on principal to principal basis to Segoma Israel on its own account. Segoma India works on Principal to Principal basis as they take the risk of loss of diamonds, damage to diamonds, theft of diamonds during there possession and in case of defective service it is a loss to them and their efforts would be wasted. Advance Ruling Related to Intermediary Services: 1. Provision of marketing support services, call centre services, payment processing etc does not amount to provision of intermediary services (M/s. GoDaddy India Web Services Pvt. Ltd
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GoDaddy US through International Credit Card, wherein applicant is not in the picture. This fact further shows that the applicant is not providing any service to Indian Customers and hence could not be said to be an intermediary for the purpose of POPS rules. Reimbursements of salary and other emoluments of employees under deputation contracts with Group companies is not a service itself. Incidentally it can inferred that mere presence of three parties involved (individual, group company and subsidiary company) does not make the service as intermediary service (M/s North American Coal Corporation India Pvt. Ltd. V. Commissioner of Central Excise, Pune-III, Advance Ruling No. AAR/ST/13/2015, Application No. AAR/44/ST/2/2014) = 2015 (12) TMI 420 – AUTHORITY FOR ADVANCE RULINGS In this case, certain employees of the US Company were sent on deputation to its Indian subsidiary. The Salary payment of US Company s employee was continued to be paid in the US and recovered from the Indian compa
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no liability to pay service tax on the salary and the allowances payable by the applicant to the employee in terms of the dual employment agreement and such salary will not be eligible to levy the service tax as per the provisions of the Finance Act. Customer support and payment processing services provided by the service provider does not make the service provider an intermediary, as long as the Services are provided on own account. (M/s. Universal Services India Pvt. Ltd. v. The Commissioner of Service Tax. Gurgaon, Ruling No.AAR/ST/07/2016 in Application No. AAR/44/ST/14/2014) = 2016 (5) TMI 750 – AUTHORITY FOR ADVANCE RULINGS In this case, the applicant proposed to assist WWD US with the processing of payments made by their Customers in India through their internet banking facilities/ credit cards. The detailed facts were as follows – WWD US would provide its services and products to customers in India through its website. In respect of such services, the customers would make the p
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ts of the customer remitted directly through the payment gateway. Since the service is being provided on own account, the service is not covered by Rule 9 (intermediary services) but covered under Rule 3 of the POPS rules, 2012. The Advance Ruling Authority relying on the CBEC Education Guide dated 20th June 2012 issued by Ministry of Finance, Department of Revenue, Tax Research unit ( TRI] ) held that normally a service receiver is the person is legally entitled to receive the service and is therefore obliged to make payment of the service received whether or not he actually makes the payment or someone else makes the payment on his behalf. In the facts of the present case, even though the applicant processed the payment of the customer, the service was being rendered to WWD US who was legally entitled receive the service and obliged to make payment for the same. Hence as per above it is amply Clear that Segoma India does not fall under intermediary. 03. CONTENTION – AS PER THE CONCER
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ed 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. As per Section 97(2) of CGST MGST Act 2017, The question on which the advance ruling is sought under this Act. Whether a transaction is Export of Services or not is dependent upon the fact as to whether Supply of Services is out of India or Not. Consequently, if the MAAR proceeds ahead with examination and consideration of this fact, discussion and findings on aspect of place of supply will be inevitable. The Act limits AAR to decide issued earmarked for it under Section 97(2) of MGST/CGST Act. Therefore, where a question also involves examination of place of Supply (which is not amongst the issued which can be decided by AAR), the question cannot be taken by the authority for lack of jurisdiction. (Ref:- Decision by Haryana Authority for Advance Ruling HAR/HAAR/R/201
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y way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; C. The dealer has contended in point No.15 that As per Agreement between R2Net and Vendors, R2NET lists on the system ONLY those diamonds that are photographed ……………. Segoma India currently catering to Indian vendor s f R2Net only . Vendors of R2Net give diamond on returnable basis to Segoma India Point 2.4 of Operating Policy of R2Net categorically describes – R2Net lists on the system ONLY those diamonds that are photographed with its proprietary Diamond Display Technology-Segoma It is to note that Segoma India does NOT have liberty
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ment copy submitted by dealer, M/s. Segoma India is Service provider, wholly owned subsidiary of Service recipient. M/s. Segoma Limited and Segoma India are fixed establishment as per section 2(7) of IGST Act 2017. Thus it does not satisfy the condition V of Section 2(6) IGST Act 2017. E. Also, the Tax invoice shows that M/s. Segoma Limited has been charged in Indian Rupees and has received consideration in foreign currency, figures of which do not match. It is contravention with condition (iv) of Section 2(6) of IGST Act 2017. Hence dealer s application cannot be maintained under heading with question of law that whether said transaction is Export of Services or not. Dealer s application may please be rejected. In Addition, the location of Supplier is in Mumbai. Thus, the type of supply should be Intra-state. Hence he is liable to pay CGST+SGST for supply of Services as per section 13(3) (a). Additional submissions of Applicant in connection with contention of officer dt 23.08.2018- 1
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photography. The diamonds are made available by vendors of R2Net in India and not by any means by the R2Net. Segoma India provides service to Segoma Israel and hence Segoma Israel is the recipient and not R2Net. As per section 13(3)(a) of the IGST Act, 2017 The place of supply of the following services shall be the location where the services are actually performed, namely: (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting On behalf of the supplier of services in order to provide the Services. Therefore, as per above extract of section 13(3)(a) of the CGST Act, it is very clear that goods are not made available by R2Net.In fact, diamonds for photography are provided as per vendors convenience. There is no control of R2Net for providing the diamonds for photography to Segoma or R2 Net s proprietary firm. As per above clause, R2Net is not providing the diamonds nor
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A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. Based on above facts, Segoma India is established under Indian companies Act having separate PAN number and it is not branch, agency or representational office of Segoma Israel. So Segoma India is distinct person for section 2(6)(v) of IGST Act and not covered under explanation 1 of section 8 of IGST Act. There is no question of fixed establishment of as per 2(7) of the IGST Act, 2017. 2. Learned Deputy Commissioner of State Tax(E-907) believes that Segoma Limited has been charged in Indian Rupees and has received consideration in foreign currency, figures of which do not match thus Segoma India is in contravention with condition(iv) of section 2(6) of IGST Act 2017. In the above context we would like to submit as under: Following are the conditions for the export export of services means the supply of any service whe
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ase was taken up for Preliminary hearing on dt. 03.072018 with respect to admission or rejection of present application when Sh. Pathik Shah, C.A. alongwith Sh. Mukhtar Shaikh, Asstt. Manager appeared and made contentions for admission of application as made in their ARA. jurisdictional Officer, Sh. Manoj Ohekar, Dy. Commissioner of S.T. (E- 907) Nodal Division -5, Mumbai appeared and stated that they would be making written submissions in due course. The application was admitted and called for final hearing on 31.07.2018, Sh. Madhukar P. Khandekar, C.A. along with Sh. Rajesh Mehta, C.A. Sh. Mukhtar Shaikh, Asstt. Manager, Sh. Dharmesh Padnabhan, Vice President and Sh. Gaurav Shetty, Employee of the company appeared and made oral and written submissions. Jurisdictional Officer, Sh. Manoj Ohekar, Dy. Commissioner of S.T. (E- 907) Nodal Division – 5, Mumbai appeared and made written submissions. 05. OBSERVATIONS We have gone through the facts of the case. The issue was heard at length fr
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Net send their diamonds and or gem stones to be photographed to Segoma India who issues memo of receipt of diamonds to customers of R2Net. At last Segoma India takes photos of diamond and upload photos of diamond on software of Segoma Israel. It is this transaction between Segoma India and Segoma Israel of providing photography service which is claimed as a zero rated export supply within the meaning of section 16 of the IGST Act and exempt from levy of tax. It is the view point of the applicant that impugned transaction of photography service satisfies all the conditions of export of services within the meaning of section 2(6) and section 16 of the IGST Act. In view of their submissions we are required to ascertain whether applicant satisfies all the conditions simultaneously as mentioned in Section 2(6) of the IGST Act. In this case admittedly the location of the provider of services is in India and the location of the recipient of service is in Israel and therefore we take this oppo
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e satisfies conditions at (i) and (ii) of Section 2(6) of the IGST Act. However as stated above, to qualify as an export of services all the conditions must be satisfied simultaneously and therefore we now take upon ourselves to discuss whether applicant satisfies (iii), (iv) and (v) of section 2(6) of the IGST Act. As per condition at (iii) above, which pertains to place of supply of service and that the place of supply of service shall be outside India. Section 13 of the IGST Act contains provisions for determining the place of supply of services where the location of the supplier of the services or the location of the recipient of services is outside India. The place of supply of service shall be determined as per the provision contained in section 13 of the IGST Act. The said section has been divided into two parts. The subsections (3) to (13) provides for determination of place of supply of service, for service other than those listed in sub-sections (3) to (13). In the instant ca
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ich are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; (b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services. In this transaction we find that diamonds are physically required to do photography service and this fact is not denied by the applicant. However it is the contention of the applicant that diamonds are not owned by Segoma Israel. He further submits that the recipient of services should make available physically goods to service provider and on the contrary in this case diamonds are made available by third party. Accordingly he submits that provision of section 13 (3) (a) of the IGST Act should not be applied in his case. The main contention of the ap
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ds of the statute are clear, plain and unambiguous then it must be given their ordinary meaning. It is the cordial rule of interpretation that where the language used by the legislature is clear and unambiguous then the plain and natural meaning of the words should be supplied to the language used and resort to any rule of interpretation to unfold the intention is permissible only where there is any ambiguity. Plethora of decisions of the Apex Court are there to support the proposition, for e.g. Smt. Tarulata Shyam Vs CIT 108 ITR 345 (SC) = 1977 (4) TMI 3 – SUPREME COURT. This concept is explained in detail by the Hon. SC in M/s. Grasim Industries Ltd. vs Collector of Customs, Bombay on 4 April, 2002 in Appeal (Civil) 1951 of 1998. = 2002 (4) TMI 52 – SUPREME COURT OF INDIA The court held that – The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, a
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of services is over and the service is clearly provided in India where the services are actually performed. The next condition to be satisfied is that the payment for services in question must have been received in convertible foreign exchange. The condition (iv) reads as the payment for such service has been received by the supplier of services in convertible foreign exchange. The jurisdictional officer submits that the tax invoice shows that Segoma India has charged in Indian Rupees and has received consideration in foreign currency, figures of which do not match and come to the conclusion that condition (iv) is not satisfied. As per this condition the payment received by the supplier of services should be in convertible foreign exchange. Applicant has submitted sample FIRC (Foreign Inward Remittance Certificate) and invoices and as such we find that applicant has satisfied this condition. The condition (v) of the definition of export of services as per section 2(6) reads as: the su
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at they are established under the Indian Companies Act having separate PAN number and therefore it is not a branch, agency or representational office of Segoma Israel. However, the statutory compliances made by an applicant in a country, in this case India, would in no way alter the status or relationship between parties as discussed above. Thus applicant also failed to satisfy this condition as well. We have already stated that all the conditions stipulated in section 2(6) shall be simultaneously complied with in order to consider any services as export of services. As a matter of fact we have noticed that conditions at (iii) and (iv) have notbeen complied with, in this case and as such impugned supply is not export of services within the scope of section 2(6) of the IGST Act. In the case before us it is seen that the location of the supplier of service is in Mumbai and the place of supply as determined as per provisions of section 13(3) (a) of the IGST Act is also in Mumbai, a place
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