Online and offline tendering classified as services for taxation under heading 9997

The Authority for Advance Ruling, Maharashtra, determined that both online and offline tendering are classified as Supply of Services. They are to be taxed under services heading 9997, which covers miscellaneous services. The classification was based on the definitions of goods and services under the CGST Act, with tendering falling under the definition of services. The Authority concluded that tendering does not fit into specific service categories but falls under the residual services heading.

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Issues Involved:
1. Classification of online tendering as Supply of Goods or Supply of Services.
2. Classification of offline tendering as Supply of Goods or Supply of Services.
3. Appropriate tariff head for taxing Online Tendering.
4. Appropriate tariff head for taxing Offline Tendering.
5. Classification of tendering as administrative service or specific service.

Issue-wise Detailed Analysis:

1. Classification of Online Tendering:
The applicant, Navi Mumbai Municipal Corporation, raised the question of whether online tendering should be classified as Supply of Goods or Supply of Services. The Authority observed that online tendering involves the entire process being conducted online, including application, payment of fees, and submission of bids. As per Section 2(56) of the CGST Act, 2017, goods are defined as movable property excluding money and securities. Online tendering does not meet this definition. Instead, it fits within the definition of services under Section 2(12) of the CGST Act, which includes anything other than goods, money, and securities. The Authority concluded that online tendering is a service, as it involves intangible products delivered via electronic networks, aligning with the definition of Online Information and Data Access or Retrieval Services under Section 2(17) of the IGST Act.

2. Classification of Offline Tendering:
For offline tendering, the process involves manual procurement of tender forms and submission of bids in hard copy. The Authority noted that the difference between online and offline tendering is the medium of tender form distribution. Despite the physical aspect of offline tendering, it also involves intangible services like application processing and fee payments. As per Section 2(12) of the CGST Act, offline tendering does not entirely fit the definition of goods but aligns with the definition of services. Therefore, the Authority determined that offline tendering should also be classified as a service.

3. Tariff Head for Online Tendering:
The GST Tariff for services includes Chapter 99, covering Headings 9954 to 9999. Online tendering is not specifically mentioned under any heading. The Authority identified Heading 9997, which covers miscellaneous services not specified elsewhere, as the appropriate tariff head for online tendering. Thus, online tendering should be taxed under services heading 9997.

4. Tariff Head for Offline Tendering:
Similarly, for offline tendering, the Authority found that it also falls under the category of services. Since offline tendering is not explicitly listed under any specific heading, the Authority concluded that it should be taxed under the same services heading 9997 as online tendering.

5. Classification as Administrative or Specific Service:
The final issue addressed whether tendering should be considered an administrative service or a specific service. The Authority, after extensive deliberation, concluded that tendering falls under the residual Services Heading 9997, indicating it is a type of miscellaneous service not classified elsewhere.

Conclusion:
The Authority for Advance Ruling, Maharashtra, concluded that both online and offline tendering are to be classified as Supply of Services. Both types of tendering should be taxed under the services heading 9997, which covers miscellaneous services. Tendering is not specifically categorized as an administrative or specific service but falls under the residual services category. The detailed analysis and conclusions were made in accordance with the provisions of the CGST Act and MGST Act, 2017.

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