2019 (11) TMI 478 - AAAR - GST

AAAR Maharashtra sets aside advance ruling on manpower services export classification citing jurisdictional limits under Section 97(2)

The AAAR Maharashtra condoned a 26-day delay in filing an appeal by the jurisdictional officer, attributing it to teething problems in GST implementation. ... Scope of Advance Ruling application - Classification of supply - supply of manpower services to highly technical industries such as Oil & Gas, Power etc. - zero-rated supply or a Normal supply - export of service - delay in filing appeal - time limitation - challenge to AAAR decision. Time limitation - HELD THAT:- There is a delay of 26 days in filing the said appeal by the appellant and the Appellant has filed miscellaneous application for the condonation of the said delay of 26 days, wherein the Appellant, which happens to be the jurisdictional officer, has attributed the said delay of 26 days in filing of the instant appeal to the initial teething problem being faced by them in the implementation of the GST procedures after the introduction of the GST regime - the delay is condoned - appeal filed before us in terms of proviso to sub section 2 of section 100 of the CGST Act 2017. Merits of the case - classification of supply - challenge to impugned Advance Authority Ruling, wherein the Authority of the Advance Ruling held that the transactions covered under the Master Service Agreement (Intercompany Service Agreement) entered between Respondent and NES Abu Dhabi are export of services under the GST Act, 2017 - zero rated supply - determination of the place of supply of goods/services - whether the services being provided by them to their overseas client i.e. M/s NES Abu Dhabi in terms of the subject MSA Agreement will be export or not and whether the same would be zero-rated supply or not? - HELD THAT:- Section 97(2) of the CGST Act, 2017 encompassing the specific questions, which are to be sought under the Advance Ruling, it can decisively be inferred that the questions raised by the Respondent before the Advance Ruling Authority were beyond the scope and jurisdiction of the Advance Ruling, and hence do not warrant any ruling thereon. The Advance Ruling Authority should have refrained from passing any ruling on the above mentioned two questions asked by the Respondent vide the Advance Ruling application filed before the Advance Ruling Authority - since the questions asked by the Appellant are not covered under the scope and jurisdiction of the Advance Ruling, no advance ruling in this regard can be passed. Issues Involved:1. Whether the transaction in question was a zero-rated supply or a normal supply under the GST Act.2. If the said supply was zero-rated, whether the same could be considered as an export of service under GST Act.3. Jurisdiction of the Advance Ruling Authority to determine the place of supply.Detailed Analysis:1. Nature of Supply: Zero-Rated or Normal Supply- The respondent, engaged in providing manpower services to technical industries, proposed to enter into a service agreement with NES Abu Dhabi, a subsidiary of the same parent company, NES Global Ltd, UK.- The Advance Ruling Authority (ARA) initially held that the transaction was a zero-rated supply and classified it as an export of service under the GST Act.- The appellant argued that the ARA's decision was based solely on the draft Master Service Agreement (MSA) and not the final agreement, questioning the completeness of the provided documentation.2. Export of Service Classification- The appellant contended that the ARA failed to appreciate the need for detailed information on the end-to-end transactions to determine the true nature of the services provided.- The respondent maintained that the services were provided on their own account, thus qualifying as an export of service and not as intermediary services.- The respondent referenced Circular No. 107/26/2019-GST, which supports their stance that services provided on one's own account do not fall under the intermediary category.3. Jurisdiction of the Advance Ruling Authority- The appellant argued that the ARA exceeded its jurisdiction by addressing questions not specified under Section 97(2) of the CGST Act, 2017, such as determining the place of supply.- The appellate authority agreed, stating that questions involving the determination of the place of supply are beyond the scope of the Advance Ruling Authority.- Section 97(2) explicitly lists the questions eligible for advance ruling, which do not include the determination of the place of supply.Condonation of Delay:- The appellant filed a miscellaneous application for condonation of a 26-day delay in filing the appeal, attributing it to initial teething problems post-GST implementation.- The appellate authority condoned the delay, allowing the appeal to proceed.Final Decision:- The appellate authority set aside the ARA's ruling, concluding that the ARA lacked jurisdiction to decide on the questions posed by the respondent.- The order emphasized that the questions raised were beyond the scope of Section 97(2) of the CGST Act, 2017, and thus, no advance ruling could be passed on those grounds.Order:- The appellate authority held that since the questions asked by the appellant were not covered under the scope and jurisdiction of the Advance Ruling, no advance ruling could be passed.