Appellate Authority Rules Service to BCCL as Import under IGST Act

The appellate authority modified the WBAAR's order, determining that the service provided by the appellant to BCCL qualifies as an import of service under Section 2(11) of the IGST Act. Consequently, GST is to be paid by BCCL under the reverse charge mechanism as per Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017.

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Issues Involved:
1. Determination of the person liable to pay GST under the Maintenance and Repair Contract (MARC) between the appellant and BCCL.
2. Classification of the service as an import of service under the GST Act.
3. Validity of the WBAAR's conclusion regarding the location of the supplier.

Issue-wise Detailed Analysis:

1. Determination of the Person Liable to Pay GST:
The appellant, a Russian company, entered into a MARC with BCCL for the maintenance of Electric Rope Shovels. The appellant raised invoices inclusive of tax, but BCCL required revision of invoices by reducing the tax element paid under the reverse charge mechanism. The appellant contended that as per Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017, BCCL is liable to pay IGST on services imported from the appellant under the reverse charge mechanism. The WBAAR held that the supply of service to BCCL is not an import of service, and thus, the appellant's domestic entity is liable to pay tax.

2. Classification of the Service as an Import of Service:
The appellant argued that the services rendered under the MARC qualify as an import of service, as the supplier (appellant) is located outside India, the recipient (BCCL) is located in India, and the service is provided in India. The WBAAR concluded that the domestic entity of the appellant is the supplier, based on the fixed establishment of human and technical resources at BCCL's site. However, the appellate authority found that the WBAAR did not consider the entire control of activities resting with the foreign entity and the fact that the domestic entity was established in 2018, while services were provided since 2015. The appellate authority concluded that the conditions for import of service under Section 2(11) of the IGST Act are satisfied.

3. Validity of the WBAAR's Conclusion Regarding the Location of the Supplier:
The WBAAR's conclusion was based on the presence of human and technical resources at BCCL's site, indicating a fixed establishment in India. However, the appellate authority noted that the definition of 'fixed establishment' excludes the registered place of business and requires suitable structures at the supplier's premises, not the recipient's. The appellate authority found that the WBAAR's conclusion did not comply with the definition of 'fixed establishment' and that the appellant's domestic entity does not maintain the required resources to provide the service. The appellate authority also noted that the MARC holder's activities are controlled by the foreign entity, and the domestic entity acts merely as a collection and disbursement center.

Conclusion:
The appellate authority modified the WBAAR's order, concluding that the supply of service by the appellant to BCCL qualifies as an import of service under Section 2(11) of the IGST Act, 2017. Consequently, GST is payable by BCCL under the reverse charge mechanism as per Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017.

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