Sourcing services to Hong Kong associate deemed taxable supplies under GST but export status determination outside AAR jurisdiction

AAR Haryana ruled that services provided by the applicant to its Hong Kong associate concern, including sourcing of goods like apparel and accessories, constitute taxable supplies under GST. However, the authority declined jurisdiction to determine whether these services qualify as zero-rated exports or whether GST refund on inputs is available, as both issues require examination of place of supply provisions which fall outside AAR's statutory jurisdiction under the GST framework.

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Issues Involved:
1. Taxability of services provided by Esprit India to its associate concern in Hong Kong EDCFE under GST regime.
2. Whether the services provided by Esprit India qualify as "Export of Services" with zero-rated taxability.
3. Eligibility of Esprit India for seeking refund of GST paid on input services or goods.

Detailed Analysis:

1. Taxability of Services Provided by Esprit India:
The Authority observed that the services provided by Esprit India to EDCFE, as enumerated in the application, qualify as taxable services under the GST regime. The classification and taxability of each service are as follows:

- Market Research: Conducted by Esprit India to understand market dynamics and advise on pricing, classified under SAC 998371 (Market research services), taxable at 18% under forward charge.

- Purchase of Goods and Trademark Protection: Esprit India assists in trademark protection and does not purchase goods, classified under SAC 998599 (Other support services n.e.c.), taxable at 18% under forward charge.

- Identification of Suppliers: Esprit India evaluates and maintains supplier data, classified under SAC 998599 (Other support services n.e.c.), taxable at 18% under forward charge.

- Negotiation with Suppliers: Esprit India communicates terms but does not negotiate, classified under SAC 998599 (Other support services n.e.c.), taxable at 18% under forward charge.

- Inspection and Quality Control: Conducted by Esprit India based on guidelines, classified under SAC 998311 (Management consulting and management services), taxable at 18% under forward charge.

- Logistics: Esprit India arranges logistics as per instructions, classified under SAC 998311 (Management consulting and management services), taxable at 18% under forward charge.

2. Qualification as "Export of Services" with Zero-Rated Taxability:
The Authority noted that "zero-rated supply" under Section 16(1) of the IGST Act, 2017, includes the export of goods or services. However, the determination of whether a transaction qualifies as "export of services" depends on the "place of supply" being outside India. Since the "place of supply" is not within the jurisdiction of the Advance Ruling Authority under Section 97(2) of the CGST/HGST Act, 2017, the question of zero-rated taxability could not be addressed.

3. Eligibility for GST Refund on Input Services or Goods:
The eligibility for a refund of GST paid on inputs and input services used in the export of services is contingent upon fulfilling the conditions under Section 2(6) and Section 16(1) of the IGST Act, 2017, and Section 54 of the CGST/HGST Act, 2017. However, as the determination of "export of services" involves the "place of supply," which is outside the jurisdiction of the Authority, the question of refund eligibility could not be addressed.

Conclusion:
1. The services provided by Esprit India to EDCFE are taxable under GST as discussed.
2. The question of whether these services qualify as "export of services" and are zero-rated is outside the jurisdiction of the Authority.
3. The eligibility for a refund of GST on input services or goods is also outside the jurisdiction of the Authority due to its dependence on the "place of supply."

Ordered accordingly.

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