2019 (1) TMI 1091 – AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA – TMI – Classification of services – services provided by the applicant in the nature of Research on the matter related to functioning of the holding of company – services provided by the applicant in the nature of Information on Market in the territory – service supplied by the Applicant under the Marketing Services Agreement dated 1 December 2012 – export of services – supply of “Support services” or intermediary services – future transaction – naturally bundled services – Export of services or not – Section 2(6) of the Integrated Goods and Services Tax Act 2017 – Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of “Support services” falling under HSN code 9985 or “Intermediary service” classifiable under HSN code 9961/9962?
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Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of “Support servi
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t the proposed service would not fall to be classified as ‘intermediary service’.
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Under the GST Act, a composite supply would mean a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply – In respect of supply which consist of more than two taxable supplies and to fall within the ambit of composite supply, it will be necessary for us to determine whether a particular supply is naturally bundled in the ordinary course of business and what constitutes principal supply.
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Services, naturally bundled or not? – Held that:- The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined wi
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s its essential character.
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Whether the services provided under the Service Agreement Merit classification as support services falling under HSN code 9985? – Held that:- The services provided by the applicant in the nature of Research on the matter related to functioning of the holding of company such as – corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon would fall under service code tariff 998599 as other support services nowhere elsewhere classified.
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Whether the service supplied by the Applicant under the Marketing Services Agreement dated 1 December 2012 constitute a supply of “Support services” falling under HSN code 9985 or “Intermediary service” classifiable under HSN code 9961 / 9962? – Held that:- The concept of intermediary under the GST Act is substantially identical to the concept o
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urther we find from nature of services that applicant’s role in respect of adoption and implementation of AM’s advertising policy, conducting sales promotion through exhibition trade, liaising with customer etc. is in the nature of assistance to AM in conducting said activities and not actual provision of services on his own account – the services the applicant proposes to provide would fall under Group 99837 as Market Research Services.
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Whether the services provided by the Applicant is an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? – Held that:- The supplier of service i.e. applicant is located in India, the recipient of service i.e. AM is located outside India -Japan; payment is received in convertible foreign exchange, the supplier of service and the recipient of service are not merely establishment of a distinct person and applicant not being an intermediary and services are not specified in sub-section (3) to (13) of se
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services supplied by the applicant under the Marketing Services Agreement would fall under Group 99837 as Market Research Services.
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The service provided by the ‘Marketing Services Agreement’ would qualify as an export of taxable service. – GST-ARA-35/2018-19/B-108 Dated:- 5-9-2018 – SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, (MEMBER) PROCEEDINGS (Under section 98 of 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 Asahi Kasei India Private Limited, the applicant, seeking an advance ruling in respect of the following ISSUE. . 1. Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of Support services falling under HSN code 9985 Intermediary service classifiable
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sions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS: Asahi Kasei India Private Limited (hereinafter referred to as the Applicant ) is a company incorporated in India in August 2012. The Applicant is a subsidiary of Asahi Kasei Corporation, Japan ( Asahi Japan ). Asahi Japan is the flagship company of the Asahi Kasei group. Asahi Kasei group S fibers and textiles, petrochemicals, pharmaceuticals, polymers, electronic devices, home products, construction materials, health care etc. The Applicant provides sales promotion and marketing support to Asahi Kasei group. For this, the Applicant has entered in to a Services Agreement dated 01 March 2013 with Asahi Japan and Marketing Services Agreement with various group companies of Asahi Kasei group. The scope of work under the Agreement is broadly stated below: a. Collecting and analyzing information i.e. market analysis and supporting Asahi Kasei group in getting new business; b
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ts Division (Asaclean) of Asahi Kasei Chemicals Corporation [dated 01 October 2013] as amended vide agreement dated 01 July 2016: (modified 5th January 2017 and taken over by Asahi Kasei Corporation, Japan) d. Agreement with Asahi Kasei Plastics North America Inc. [dated 02 January 2014]; e. Agreement with Asahi Kasei Home Products Corporation [dated 01 April 2015]; f. Agreement with Bemberg Division of Asahi Kasei Fibers Corporation (dated 01 May 2015]; (modified 5th January 2017 and taken over by Asahi Kasei Corporation, Japan) STATEMENT CONTAINING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED Question on which advance ruling is required Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of Support services falling under HSN code 9985 Intermediary service classifiable under HSN code 9961 /9962? Statement of facts having a bearing on the question The scope of the services provided by the Applicant unde
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agreed territory) as Party A may from time to time request. In the event Party A should require more detailed information than that so provided by Party B, Party B shall exert its best efforts to obtain such further or more detailed information. 6. At such time and from time to time, as and when representatives of Party A, or its related business circles or customers visit the Territory and Party A so requests, Party B shall provide necessary assistance in business activities (including interpreting) to such representatives. 7. From time to time, as and clean requested by Party A, Party B shall make market surveys of the Products in the Territory and report the results thereof to Party A. 8. Party B shall perform services, as directed by Party A, resulting from the assignments pursuant to paragraph 4 through 7 of this Agreement, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. As per Clause 9 of the Agreement, service consi
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by Asahi Japan or other overseas group company directly. In fulfilment of its obligation, the Applicant has undertaken following activities: (i) Providing reports on the condition of the economy and undertaking market survey (ii) Visit to existing and perspective customers to understand their requirement, their business plan and their feedback and reporting to Asahi Japan (iii) Providing information on the products of Asahi Japan to the existing and perspective customers (iv) Generating marketing leads and relaying to Asahi Japan (v) Helping customer on the product trial (vi) Facilitating meeting between customers and agent Asahi Japan Statement containing the applicant s interpretation of law 1. There are two possible classifications for the services supplied by the Applicant. The relevant HSN codes along with its description are tabulated hereunder: SR.NO. HSN CODE TARIFF ENTRY i. 9961 / 9962 Intermediary service – Services in wholesale trade and Services in retail trade ii. 9985 Su
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tionary definitions of the terms broker and agent . The relevant extract of the various dictionary definitions are as follows: a. Broker i. Halsbury[s Laws of England, 4th Edition, Volume 1, Para 712, Page 424: – A mercantile agent who in the ordinary course of his business is employed to make contracts for the purchase or sale of property or goods of which he is not entrusted with the possession or documents of title [Alapati Ramamurthi, Gelli Krishnamurthy & Co. Vs. J. Ramanujan and Ors. (ALR 1961 AP 408) = 1960 (7) TMI 66 – ANDHRA PRADESH HIGH COURT]. ii. K J Aiyar s Judicial Dictionary: – Word meaning an agent but used generally in a more special sense for one Who buys or sells on behalf of another. He must act according to the instructions given to him and as a general rule, his task is finished when he has made a contract between a buyer and the seller… Brokers are remunerated by commission known as brocage or brokerage… Types of brokers are: stock brokers, bill brokers,
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personally; (2) and more commonly an agent employed by one party only to make a binding contract with another. b. Agent i. Shorter Oxford English Dictionary (Deluxe Edition): A person who acts for another un business, politics, etc.; ii. Section 182 of the Indian Contract Act 1872: – An Agent is a person employed to do any act for another or to represent another in dealings with third persons; iii. Concise Law Dictionary (2008 Edition): – An agent acts on behalf of his principal and often uses is name and his acts in that capacity are attributable to the principal; 5. Having understood the meaning of the terms broker and an agent , it would be imperative to examine the scope of the term ll any other person, by whatever name called . In this regard, it is humbly submitted that the scope of this phrase is restricted by the preceding words broker or agent by applying the principle of Ejusdem Generis . As per this doctrine, where there are general words following particular and specific wo
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L-IT) = 2012 (4) TMI 79 – DELHI HIGH COURT wherein the Hon ble High Court applied the principle of ejusdem generis to interpret the expression business or commercial rights of similar nature referred to in section 32(1)(ii) of the Act and held that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which were neither feasible nor possible to exhaustively enumerate. The principle of ejusdem generis was also upheld by the Apex Court in the case of Assistant Collector of C.Ex. Vs. Ramdev Tobacco Company (1991 (51) ELT 631 (SC)] = 1991 (1) TMI 136 – SUPREME COURT OF INDIA and CCE Vs. Shital International [MANU/SC/0884/2010) = 2010 (10) TMI 19 – SUPREME COURT OF INDIA. Similar view has been affirmed in the following cases: i. CIT vs. Rani Tara Devi [2013 (355) ITR 457 = 2013 (3) TMI 53 – PUNJAB & HARYANA HIGH COURT ii. Commissioner of Income tax, Udaipur Vs. Mcdowell & Co. Ltd.
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y or easier, make something possible or aiding or helping. Thus, the dictionary meaning of facilitation is very wide and covers processing, storage, transport, advertising, sales promotion etc, all activities as each and every activity aids or smoothens supply of goods. Goods Transport service (9965), Transport support service (9967), advertising and market research service (9983) are separate service classification. If such a wide meaning is adopted, it will render many of these PP service classifications redundant. Thus, the Applicant submits that facilitate supply of goods refers to an activity directly related to the sale. 12. In the instant case, the Applicant and the Service recipient are acting as independent contractors. Moreover, the Applicant and the service recipient have no authority to create nor do they assume any obligation on behalf of each other. The point of distinction between an agent and an independent contractor as per the Supreme Court Words and Phrases (3rd Edit
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pendent employment, contracts to do a piece of work according to his own methods, and without being subject to his employer s control, except as to the result of the work. An independent contractor is one Who undertakes to produce a given result but so that in the execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand. 15. As highlighted above, the Services Agreement specifically provides a clause that the Parties do not intend to create any principal-agent relationship, Further, the consideration charged by the Applicant is not qua a particular transaction between the service recipients and their customers. Therefore, the services supplied by the Applicant to the service recipients fails to comply with the second limb of the definition of the term intermediary . 16. Since the services have been provided by the Applicant as an independent contractor, the Applicant would automaticall
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inary course of business, one of which is a principal supply b. It is pertinent to note that the definition of intermediary under Section 2(13) of the IGST Act is pari materia to the definition provided under the Finance Act 1994. The Education Guide, 2012 issued by the CBEC inter alia provides the various factors that needs to be considered in determining whether a person is an intermediary. The relevant extract is reproduced hereunder: Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary s service is invariably identifiable from the main supply of service that he is ar
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of the term intermediary. The relevant extract is reproduced hereunder; Similarly, persons such as call centres, who provide services to their clients by dealing with the customers of the client on the client s behalf, but actually provided these services on their own account, will not be categorized as intermediaries. In the instant case, although the Applicant deals with the service recipients customers, but the same is for the purpose of providing services to the service recipient on its own account. Consequently, the services provided by the Applicant cannot be classified as Intermediary services . 20. In an identical case as the present situation, GODADDY India Web Services Pvt. Ltd. had filed an Advance Ruling under the Service tax regime [2016 (46) STR 806 (A.A.R.)] = 2016 (3) TMI 355 – AUTHORITY FOR ADVANCE RULINGS. The relevant extract of the judgment is reproduced below: 11. Applicant proposes to provide support services in relation to marketing, branding, offline marketing,
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at in view of these indicators, service provided by them to GoDaddy US is a bundle of services, which is bundled in the normal course of business. This point has not been controverted by the Revenue. We agree with the submissions of the applicant that proposed services are a bundle of services, bundled in normal course of business and not intermediary service. 21. Applying the above to the present case, while the scope of services provided to the Asahi Kasei group is very wide, the same would fall within the ambit of the term composite supply with the marketing services being the principal supply 22. In view of the above, it is amply clear that the services provided by the Applicant cannot be considered as an Intermediary services . However, in order to determine the correct classification of the services provided by the Applicant, it would be imperative to refer to the scope of the term Support services . 23. In the absence of any statutory definition of the term Support services unde
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ice utilities, lounge, reception with competent personnel to handle messages, secretaria services, internet and telecom facilities, pantry and security; [Pre-negative List regime] Section 65B(49) support services means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis; [Negative List regime] 24. From the above, it can be construed that marketing services, advertisement and promotion services, customer relationship management, evaluation of prospective customers, etc. would qualify to be in the nature of support services. 25. In this regard, it is submitted that the scope of the services that is to be provided by the Applicant to the
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the service recipient in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; d) Liaising with Customers and potential Customers and to collect their product development plans and strategy and road-maps , as well as their product specifications; and reporting the same to the service recipient the information obtained through such interactions; e) Providing any feedback to the service recipient that would help improve the service recipient s marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; or the sake of clarity, neither AKI (i.e. the Applicant) nor any of its representatives shall have any authority to conduct negotiations on behalf of the service recipient; f) Connecting Customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commerc
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be reasonably requested by service recipient after the effective date in writing to AKI. It may however be noted that the scope of service for the marketing services agreement with APNA do not include the points (c), (g) and (i) as mentioned above Statement containing the applicant s interpretation of law As in case of Question No. 2 above QUESTION NO. 3 Question on which advance ruling is required Whether the services provided by the Applicant is an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? Statement of facts having a bearing on the question The Applicant receives payment in freely convertible foreign exchange i.e. Japanese Yen / United States Dollar Statement containing the applicant s interpretation of law 1. In this regard we refer to the definition of the term export of services as defined under section 2(5) of the IGST Act. The relevant extract is set out hereunder: (6) export of services means the supply of any service w
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the location of the supplier of service shall be Maharashtra i.e. in India. b. Condition II – Recipient of service is located outside India The term location of the recipient of services has been defined under section 2(14) of the IGST Act. As per the said definition, if a supply has been received from a registered place of business or registered fixed establishment, the location of the recipient shall be the respective place of business or fixed establishment. However, in other cases, the usual place of residence of the service recipient shall be the location of the service recipient. In the instant case, the Asahi Kasei group is not registered in India and therefore, their registered place of business will be their registered address (i.e. outside India). c. Condition III – Place of supply of service is outside India From (a) and (b) above, it appears that while the service provider is situated in India, the service recipient is located outside India. In order to determine the place
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ot merely establishment of distinct person Explanation 1 to Section 8 inter alia provides that where a person has an establishment in India and any other establishment outside India, then such establishments shall be treated as establishments of different legal persons. The term person has been defined to include a Company. In the instant case, the service recipient i.e. Asahi Kasei group is not an establishment formed by the Applicant and consequently, it cannot be treated as an establishment of a distinct person. 3. In view of the above, it can be construed that the Applicant fulfils all the conditions for treating the supply of services as an export of services in terms of Section (6) of the IGST Act. Therefore, the answer to Question No. 3 above should be in affirmative. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- M/s. Asahi Kasei India Pvt. Ltd., The Capital Office No. 1502-B, 15th Floor, Plot No. C-70, G-Block, Bandra
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he Applicant ) has entered into Service Agreement dated 1st March, 2013 with Asahi Kasei Corporation, a Japanese Corporation. However, the address mentioned in the agreement is (The Capital, Office No.801-C, 8th floor, Plot No C70, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051, which is different from Advance Ruling Application of the applicant. The scope of the services provided by the Applicant under Service Agreement with Asahi Kasei Corporation, Japan (dated 01 March 2013) as amended on 05 January 2017 are highlighted at Clauses 4 to 8 of the Agreement. The relevant extract of the agreement is reproduced hereunder: 4. Party B (i.e. the Applicant) agrees to conduct from time to time, as and when requested by Party A (being Asahi Kasei Corporation, Japan), research on the matters related to the functions of the holding company, such as corporate accounting, corporate finance, corporate personnel and labor relations, corporate research and development, quality assurance
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es. 7. From time to time, as and when requested by Party A, Party B shall make market surveys of the Products in the Territory and report the results thereof to Party A. 8. Party B shall perform services, as directed by Party A, resulting from the assignments pursuant to paragraph 4 through 7 of this Agreement, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. As per Clause 9 of the Agreement, Service consideration received by the Applicant is the direct cost+ apportioned overhead expenses+10% margin +applicable taxes. From perusal of the above extract of the agreement it is seen that the Applicant is engaged in the activities for the party A, viz. research on the matters such as corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, provide with economic, industrial and technical information on the products
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to come under the category of Market Research services under Heading No.998371; ii) Research on the matter of corporate intellectual property appears to come under Legal documentation and certification services concerning patents, copyrights and other intellectual property rights services which fall under Heading No.998213 iii) The economic, industrial and technical information on the products falling under the category of the Products and their markets, trends and outlook together with similar information concerning such other industries, appears to fall under Original compilations of facts or information which fall under Heading No.998394 / Business Support Service(9985). iv) Providing necessary assistance in liasoning and coordinating activities for the representatives of Party A, would qualify to be in the nature of business support services which fall under Heading No.99859. v) Regarding Para 8 of the agreement, it is felt that Advance Ruling cannot be given because without prope
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ioprocess Division of Asahi Kasei Medical Co. Ltd., are highlighted at Article 2 of the Agreement. The relevant extract of the agreement is reproduced hereunder: Bioprocess Division of Asahi Kasei Medical Co. Ltd. referred to as AM in agreement dated 01 December 2012. The services shall comprise the following activities, all of which are described with respect to the Products in the Territory, and all only to be conducted at and under the explicit direction of AM. a) Conducting market surveys and providing the AM with information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential; b) Assisting AM in the adaptation and implementation of AM s advertising policy, c) Assisting AM in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; d) Liaising with Customers and potential customers and to collect their product development plans and s
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e made available to employees or other personnel of AM who may visit India; h) Providing information on products and its functioning or similar such services to AM s customers and notifying AM of any Customer complaints; i) Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting on these to AM; and j) Any other assistance in the context of the above, regarding AM s marketing activities that may be reasonably requested by AM after the Effective Date in writing to AKI(Applicant). From perusal of the extract of the above agreement dated 01.12.2012 it is seen that the Applicant is engaged in the activities for AM(service recipient), Conducting market surveys and providing the AM with information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential, assisting AM in the adaptation and implementation of AM s advertising policy, assisting AM in
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luding but not limited to providing information, guide, escort and interpreting services during Customers visits; for the sake of clarity, the premises of AKI(applicant) will not be the premises of AM and the same shall not be made available to employees or other personnel of AM who may visit India, providing information on products and its functioning or similar such services to AM s customers and notifying AM of any Customer complaints, monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting on these to AM; and any other assistance in the context of the above, regarding AM s marketing activities that may be reasonably requested by AM after the Effective Date in writing to AKI (Applicant). PRAYER In view of the above, it can be said that i) Conducting market surveys and providing the AM with the information on Indian market trends and features so as to assist in determining the nature and scope of the
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and Service Tax Act, 2017. Therefore the said service Original compilations of facts or information which individually fall under Heading No.998394 / Business Support Service(9985) will be supplied as Composite Supply and in terms of Section of the IGST Act, 2017. v) Providing any feedback to AM that would help improve AM s marketing; Facilitating AM in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, neither AKI (i.e. the Applicant) nor any of its representatives shall have any authority to conduct negotiations on behalf of AM, appears to fall under Other professional, technical and business services nowhere else classified under Heading No.998399; vi) Connecting Customers with AM representatives for the purpose of obtaining orders and establishing and maintaining close commercial relationships between AM and customers, appears to fall under business support services under Heading No.99859; vii) Providing staff of A
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ng No.998216; and x) Any other assistance in the context of the above, regarding AM s marketing activities that may be reasonably requested by AM after the Effective Date in writing to AKI(Applicant). In this, the service category is not clearly mentioned, hence, Advance Ruling should not be given for this services; Statement of facts having bearing on the question (3): The Term export of services as defined under Section 2(6) of the IGST Act and the term intermediary as defined under Section 2(13) of the IGST Act. The relevant extract is set out hereunder: (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 covetable foreign exchange; and (v) The supplier of service and the recipient of service are not merely establishments of a distinct p
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i Kasei Medical Co. Ltd (Marketing Service Agreement) is not registered in India and therefore their registered place of business will be their registered address (i.e outside India). Hence fulfilling the first condition with reference to term The recipient of service is located outside India as defined under Section 2(14) of the IGST Act. C. Condition-III place of supply of Service is outside India. The services provided by the Applicant is in nature of different services in the above two agreement viz, in Service agreement dated 1st March, 2013, the following services appears to be applicable: Market Research services under Heading No.998371; Legal documentation and certification services concerning patents, copyrights and other intellectual property rights services which fall under Heading No.998213 Original compilations of facts or information which fall under Heading No.998394i / Business Support Service under Heading No.99859. in Marketing Service agreement dated 1st December, 20
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s are as follows: In Service agreement dated 1st March, 2013, 1. The research on the matters related to functions of holding company such as corporate accounting, corporate finance, corporate personnel and labor relations, corporate research and development, market surveys appears to come under the category of Market Research services under Heading No.998371, will be covered under Section 13(2) of the IGST Act, 2017 and place of supply of service or shall be the location of the recipient of services; 2. Research on the matter of corporate intellectual property appears to come under Legal documentation and certification services concerning patents, copyrights and other intellectual property rights services which fall under Heading No.998213 , will be covered under Section 13(2) of the IGST Act,2017 and place of supply of service or shall be the location of the recipient of services; 3. The economic, industrial and technical information on the products falling under the category of the P
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ar picture of what services it pertains to. Hence, Advance Ruling or for Para 8 cannot be given. 6. Regarding Para 9 of the agreement, it is subject to separate treatment to any intermediary activities where place of provision of service is governed by Section 13(8) of the CGST Act, 2017. In Marketing Service agreement dated 01.12.2012, 7. Conducting market surveys and providing the AM with the information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential appears to fall under Market Research services under Heading No.998371 and will be covered under Section 13(2) of the IGST Act, 2017 and place of supply of service or shall be the location of the recipient of services;, 8. Assisting AM in the adaptation and implementation of AM s advertising policy appears to fall under Advertising services under Heading No.998361 and will be covered under Section 13(2) of the IGST Act,2017 and place of supply of service or shall be
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collect their product development plans and strategy and road-maps , as well as their product specifications, and reporting to AM abroad, information obtained through such interactions appears to be connected to the services at Para 10 above as principal supplies, therefore in terms of Section 8 of the Central Goods and Service Tax Act, 2017 read with Section 20 of the Integrated Goods and Service Tax Act, 2017, the said service Original compilations of facts or information which will individually fall under Heading No.998394 , / Business Support Service(9985) but as a Composite Supply under Section 13(8)(b) of the IGST Act, 2017, the place of supply of service shall be the location where the services are actually performed. 12. Providing information on products and its functioning or similar such services appears to be connected to the services at Para 10 above as principal supplies, therefore in terms of Section 8 of the Central Goods and Service Tax Act, 2017 read with Section 20 of
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ion, guide, escort and interpreting services during Customers visits; for the sake of clarity, the premises of AKI (applicant) will not be the premises of AM and the premises of AKI(applicant) in India shall not be made available to employees or other personnel of AM who may visit India, will be covered under Section 13(3)(b) interalia Section 13(4) of the IGST Act, 2017 and the place of supply of service shall be the location where the services are actually performed. 15. Providing information on products and its functioning or similar such services to AM s customers and notifying AM of any Customer complaints. In this the service category is not clearly mentioned, hence, Advance Ruling should not be given for this services; 16. Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting on these to AM, appears to fall under Other Legal services nowhere else classified under Heading No.998216, will be cove
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State or Union territory; or (iii) an establishment in a state or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. PRAYER In view of the above, it can be construed that in some services (as mentioned above) the Applicant fulfils all the conditions for treating the supply of services as an export of services in terms of Section (6) of IGST Act and in some services (as mentioned above), the Applicant does not fulfil the conditions for treating the supply of services as an export of services in terms of Section (6) of IGST Act. 04. HEARING The case was taken up for Preliminary hearing on DT. 18.07.2018 when Sh. Dinesh Kumar Agarwal, C.A. along with Sh. Sunil Kumar Bhambhari, Asstt. General Manager and Sh. Huzefa Chataiwala Manager Accounts appeared and requested for admission of application as per contentions in their ARA. Jurisdictional Of
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ation i.e. market analysis and supporting Asahi Kasei group in getting new business; b. Providing marketing & administration support and back-office support (including accounting Support); c. Networking i.e. co-ordinate with the government authorities and relevant universities to join relevant trade associations; d. Supporting sales activity of Asahi Kasei group. On this set of facts applicant has raised questions which are as under:- Que 1: Whether the service supplied by the Applicant under the Service Agreement dated 1 March 2013 constitute a supply of Support services falling under HSN code 9985 Intermediary service classifiable under HSN code 9961 /9962? On the basis of scope of Services Agreement with Asahi Japan dated 1st March 2013 as modified on 5th January 2017 applicant desire to know whether the supply falls under the category support services or intermediary services . In order to appreciate the issue whether applicant is an intermediary we reproduce below the relevant
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y B, Party B shall exert its best efforts to obtain such further or more detailed information. 6. At such time and from time to time, as and when representatives of Party A, or its related business circles or customers visit the Territory and Party A so requests, Party B shall provide necessary assistance in liasoning and coordinating activities (including interpreting) to such representatives. 7. From time to time, as and when requested by Party A, Party B shall make market surveys of the Products in the Territory and report the results thereof to Party A. 8. Party B shall perform services, as directed by Party A, resulting from the assignments pursuant to paragraph 4 through 7 of this Agreement, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. We also add here that Agreement for Modification of Services Agreement dated 5th January 2017 in no way alter the essence of services agreement date 1st March, 2013. Basis the terms
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facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary s service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as commission . Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable. In accordance with the above guiding principles, services provided by the following persons will qualify as intermediary services : (i) Travel Agent (any mode of travel) (ii) Tour Operator (iii) Commission agent for a service [an agent for buying or selling of go
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s a consolidated amount to the exporter. This is a service of transportation of goods for which the place of supply is the destination of goods. Since the destination of goods is outside taxable territory, this service will not attract service tax. Here, it is presumed that ancillary freight services (i.e. services ancillary to transportation- loading, unloading, handling etc.) are bundled with the principal service owing to a single contract or a single price (consideration). On an import shipment with similar conditions, the place of supply will be in the taxable territory, and so service tax will be attracted. When he acts as an intermediary Where the freight forwarder acts as an intermediary, the place of provision will be his location. Service tax will be payable on the services provided by him. However, when he provides a service to an exporter of goods, the exporter can claim refund of service tax paid under notification for this purpose. Similarly, persons such as call centers,
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tory. 3 To provide necessary assistance in liasoning and coordinating activities (including interpreting) to such representatives. 4. To make market surveys of the Products in the Territory and report the results thereof to Party A. 5. All other related services pertaining to above services including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. We clearly find from the scrutiny of clause 15 of the Services Agreement that the relationship between the parties is that of independent contractors meaning that the agreement does not intend to create relationship of principal and agent. The applicant shall not represent itself to be agent of party A and vice-versa. Further applicant have no authority to conclude or negotiate any contracts or secure any orders or maintain any stock of goods on behalf of Party A in this case. On the contrary applicant would provide service on own account to party A to improve functioning of holding compan
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site supply with the Marketing Services as principal supply. The expression Composite Supply has been defined under GST Act, as below – (80) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply Under the GST Act, a composite supply would mean a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. We find that applicant proposes to provide more than two taxable supplies to the recipient. In respect of supply which consist of more than two taxable supplies and to fall within the ambit of composite supply, it will be necessary for us to d
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ness provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines. The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are – There is a sing
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lopment, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon B) Information on the markets in the territory : Services pertaining to information on the markets in the territory includes – i) Economic, industrial and technical information on the products falling under the category of the Products and their markets, trends and outlook together with similar information concerning such other industries in the Territory. ii) To provide necessary assistance in business activities (including interpreting) to such representatives. iii) To undertake market surveys of the Products in the Territory and report the results thereof to Party. iv) Ancillary services to all above services, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. Apply above test to the facts of the present case, we find that applicant proposes to provide distinct category of services namely A. Services
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and legal matters. From the nature of services it is evident that these services are not interdependent but could be provided as standalone services. In as much as we can say that applicant proposes to provide two distinct category of supplies. And as such services provided by this agreement can not constitute composite supply as defined under the GST Act. However, we observe that services mentioned at (i) (ii), (iii), (iv) of category B above constitute composite supply among them as these services are clearly independent where the market survey gives bouquet of services its essential character. For the above inference we find support from the agreement itself as party A require two different kinds of services as is evident from the agreement as below: Whereas party A may from time to time desire or require related information concerning the functions of the holding company and information on the markets in the territory (as defined in paragraph 2 for all the products manufactured by
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rt services 301 998314 Information technology design and development services 302 998315 Hosting and information technology infrastructure provisioning services 303 998316 Information technology infrastructure and network management services 304 998319 Other information technology serv ices nowhere else classified Sr.no. Chapter, section, heading or group Service code (tariff) Service description 356 Group 99839 Other professional, technical and business services 357 998391 Specialty design services including interior design, fashion design, industrial design and other specialty design services 358 998392 Design originals 359 998393 Scientific and technical consulting services 360 998394 Original compilations of facts or information 361 998395 Translation and interpretation services 362 998396 Trademarks and franchises 363 998397 Sponsorship services and brand promotion services 364 998399 Other professional, technical and business services nowhere else classified Sr.no. Chapter, secti
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applicant in the nature of Research on the matter related to functioning of the holding of company such as – corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon would fall under service code tariff 998599 as other support services nowhere elsewhere classified. Further the services provided by the applicant in the nature of Information on Market in the territory which includes – Economic, industrial and technical information on the products falling under the category of the Products and their markets, trends and outlook together with similar information concerning such other industries in the Territory, To provide necessary assistance in business activities (including interpreting) to such representatives, To undertake market surveys of the Products in the Territory and report the results thereof to Party a
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providing the service recipient with the information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential; b) Assisting the service recipient in the adaptation and implementation of its advertising policy; c) Assisting the service recipient in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; d) Liaising with Customers and potential Customers and to collect their product development plans and strategy and road-maps , as well as their product specifications, and reporting the same to the service recipient the information obtained through such interactions; e) Providing any feedback to the service recipient that would help improve the service recipient s marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, neither AKI (
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itoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting the same to the service recipient; and j) Any other assistance in the context of the above, regarding service recipient s marketing activities that may be reasonably requested by service recipient after the effective date in writing Basis the above terms of the agreement, applicant desire to known whether the services as envisaged by the agreement constitute support services or intermediary services. Applicant submits that service activities as enumerated above shall be conducted at and under the explicit direction of AM in order to develop/ argument sales of Bioprocess consumable in the India territory. Applicant submits that as per the marketing service Agreement the relationship between the applicant and AM is that of independent contractors and not Intended to create between parties a relationship of principal and agent. By this agreement applican
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carries out activities such as conclusion of contracts, acceptance of sales orders, invoicing, determination of sales prices, rebate, discounts, resolution of customers complaints, or settlement of disputes with customers. On the contrary applicant would provide services on his own account to AM to agument their business Vis a Vis sale of bioprocess consumables in India territory, Thus applying above test to the facts of the case we conclude that the proposed service would not fall to be classified as intermediary service . As a corollary of this finding, we shall now move on to decide whether the services supplied by the applicant constitute supply of support services On this issue applicant reiterated the argument made in the first question. Applicant strongly relied on the definition of composite supply as defined under section 2(30) of the GST, the Education Guide-2012 and the decision of ARA in case of Godaddy India Web Services Pvt. Ltd. [2016 (46) 806 (AAR) = 2016 (3) TMI 355 –
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y has been explained in the Education Guide – 2012 which has been reproduced in the preceding paras. Applying the test as per Education Guide to the facts of the present case, we find that bouquet of services proposed to be provided would constitute as a package for single consideration. Further we find from nature of services that applicant s role in respect of adoption and implementation of AM s advertising policy, conducting sales promotion through exhibition trade, liaising with customer etc. is in the nature of assistance to AM in conducting said activities and not actual provision of services on his own account. In view of this the applicant s case is squarely covered by the decision in case of M/S. Godaddy sited supra with Marketing Research as the principal supply. This finding of ours is based on the observation that conducting market survey and information on Indian market trends are main services that determine the nature and scope of Indian Market Potential for recipient of
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n 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 covetable 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 in Section 8; We find from the details as given in the application and submissions before us, record, that supplier of service i.e. applicant is located in India, the recipient of service i.e. AM is located outside India -Japan; payment is received in convertible foreign exchange, the supplier of service and the recipient of service are not merely establishment of a distinct person and applicant not being an intermediary and services are not specified in sub-section (3) to (13) of section 13, the place of supply of service would be the location of the recipient of services i.e. AM Japan, which is outside India. As the a
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earch and development, quality assurance and corporate intellectual property, and provide Party A with its report of the research thereon would fall under service code tariff 99859 as other support services nowhere elsewhere classified. (ii) The services provided by the applicant in the nature of Information on Market in the territory which includes – Economic, industrial and technical information on the products falling under the category of the Products and their markets, trends and outlook together with similar information concerning such other industries in the Territory, To provide necessary assistance in business activities (including interpreting) to such representatives, To undertake market surveys of the Products in the Territory and report the results thereof to Party and Ancillary services to all above services, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters would fall under service code tariff 99837 with servic
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