Marine Consultancy Services to foreign ship owners are not composite supply as services can be obtained separately from different providers

AAR Maharashtra ruled that Marine Consultancy Services provided to foreign ship owners do not constitute composite supply as services can be obtained separately from different providers, making each service equally important rather than having a principal supply. The consultancy service does not qualify as business consultancy under the classification scheme as it relates to marine transportation opportunities rather than management guidance. Support services qualify as intermediary services under Section 2(13) of IGST Act. Each service maintains distinct classification for GST purposes.

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Issues Involved:
1. Whether Marine Consultancy Service (MCS) provided to foreign ship owners constitutes a "composite supply" with the principal supply of consultancy service.
2. Whether the place of supply of MCS (as a composite supply) will be determined in terms of Section 13(2)(a) of the IGST Act, i.e., the 'location of recipient of service.'
3. Whether consultancy service will qualify as business consultancy service in terms of the scheme of classification of services.
4. Whether support service qualifies as "intermediary service" in terms of Section 2(13) of the IGST Act.
5. If ruled that the support service qualifies as an intermediary service, whether the place of supply of support service as intermediary service will be the 'location of supplier of service' in terms of Section 13(8)(b) of the IGST Act.

Detailed Analysis:

Issue 1: Composite Supply of Marine Consultancy Service (MCS)
The applicant argued that MCS, consisting of consultancy and support services, should be treated as a composite supply with consultancy service as the principal supply. The Authority examined the agreement and found that the services provided by the applicant could be performed by other consultants or the foreign ship-owner's staff, indicating that these services are not naturally bundled. The Authority concluded that since the services can be provided in isolation and the foreign ship-owner does not necessarily need to avail all services from the applicant, the supply does not meet the criteria for a composite supply. Therefore, the answer to whether MCS constitutes a composite supply is negative.

Issue 2: Place of Supply for Composite Supply
Since the Authority concluded that MCS does not constitute a composite supply, the question of determining the place of supply for MCS as a composite supply under Section 13(2)(a) of the IGST Act becomes irrelevant and was not considered for decision.

Issue 3: Classification of Consultancy Service
The applicant sought to classify consultancy services under business consultancy services per the scheme of classification of services. The Authority referred to the Annexure to Notification 11/2017 - Central Tax (Rate) and observed that the consultancy services provided by the applicant are not in the nature of guiding the ship-owning company in management but are related to marine transportation opportunities. Therefore, these services are more appropriately classified under support services in transport or other professional, technical, and business services, depending on the exact nature of the service provided. Thus, the consultancy service does not qualify as business consultancy service.

Issue 4: Classification of Support Service as Intermediary Service
The Authority examined whether support services qualify as intermediary services under Section 2(13) of the IGST Act. The definition of intermediary includes a broker or agent who arranges or facilitates the supply of goods or services between two or more persons but does not supply such services on their own account. The Authority found that the support services provided by the applicant, such as monitoring voyage execution and arranging for accounts reconciliation, inherently involve interaction and coordination with ship charterers on behalf of the ship owners. Therefore, these support services qualify as intermediary services.

Issue 5: Place of Supply for Intermediary Services
Since the support services qualify as intermediary services, the place of supply for these services is determined under Section 13(8)(b) of the IGST Act, which states that the place of supply for intermediary services is the location of the supplier of services. Consequently, the place of supply for the support services provided by the applicant will be the location of the applicant in India, making the transaction subject to GST.

Conclusion:
1. Marine Consultancy Service (MCS) provided to foreign ship owners does not constitute a "composite supply" with the principal supply of consultancy service.
2. The question of determining the place of supply for MCS as a composite supply was not considered.
3. Consultancy service does not qualify as business consultancy service under the scheme of classification of services.
4. Support service qualifies as "intermediary service" in terms of Section 2(13) of the IGST Act.
5. The place of supply for intermediary services is the location of the supplier of services, making the support services provided by the applicant subject to GST.

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