AAAR upholds advance ruling on place of supply for goods sourcing services under GST Act Section 97(2)

The AAAR Haryana dismissed an appeal challenging an advance ruling regarding place of supply for sourcing goods from India. The appellant argued the AAR order was non-speaking and lacked proper application of mind. The AAAR held that the AAR had answered all questions with detailed reasons under relevant GST Act provisions. The appellant admitted providing services including market research, trademark protection, and quality control under agreements with Esprit entities. The AAAR found the AAR correctly identified service classification and tax rates, properly declined certain questions under Section 97(2), and concluded the advance ruling contained no infirmity or illegality, upholding the decision.

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Issues Involved:
1. Taxability of services provided by Esprit India to its associate concern in Hong Kong under GST regime.
2. Whether the services provided by Esprit India are covered under Export of Services with Zero rated taxability.
3. Eligibility of Esprit India for seeking refund of GST for the taxes paid on input services or goods or both.

Detailed Analysis:

Issue 1: Taxability of Services
The appellant, Esprit India Pvt. Ltd., is engaged by Esprit De Corp (Far East) Limited, Hong Kong (EDCFE) to provide sourcing services for Esprit Germany. The appellant argued that the services provided are composite and should not be vivisected into different categories. However, the Advance Ruling Authority (AAR) identified the SAC description and tax rate for the services provided, which the appellant contested was not asked for. The AAR concluded that the services provided by the appellant fall under specific SAC descriptions and are taxable under the GST regime.

Issue 2: Export of Services
The appellant claimed that the services provided qualify as 'exports' under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), and should be treated as zero-rated supply. The AAR, however, declined to categorize the services as exports, stating that the questions asked by the appellant were out of the scope of Section 97(2) of the CGST/HGST Act. The appellant's argument that the services are support services and thus qualify as exports was not accepted by the AAR.

Issue 3: Refund of GST
The appellant sought clarity on whether they are eligible for a refund of GST paid on input services or goods. The AAR refused to address this question, stating it does not fall within the ambit of Section 97(2) of the CGST/HGST Act. The appellant's plea for refund eligibility was thus dismissed by the AAR.

Conclusion:
The Appellate Authority upheld the Advance Ruling dated 11.04.2018, concluding that the AAR's decision does not suffer from any infirmity or illegality. The AAR's detailed and self-speaking order was deemed to have correctly answered all the questions raised by the appellant within the scope of Section 97(2) of the CGST/HGST Act. The appeal was dismissed, affirming the taxability of the services under the GST regime, rejecting the classification of services as exports, and denying the eligibility for a refund of GST paid on inputs.

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