2021 (1) TMI 565 - AAR - GST

AAR declines ruling on GST applicability for consultancy services to SSNNL and sub-consultant GST rate.

In Re: M/s. Posiedon Hydro Infratech,

The Authority for Advance Ruling (AAR) declined to provide a decision on the applicability of GST to consultancy services rendered to Sardar Sarovar ... Scope of Advance Ruling - Levy of GST - consultancy services rendered by various consultancy agencies to Sardar Sarovar Narmada Nigam Limited(SSNNL) - If such consultancy services is exempted from GST, whether the sub-consultant is also exempted from the payment of GST? - rate of GST - HELD THAT:- The provisions for seeking Advance Ruling made under the Act is limited to the activities conducted of the applicant only and is for the purpose of clarifying issues such as classification of the supply of goods/services provided by them, their GST liability if any, applicability of a notification issued under the provisions of the Act, determination of time and value of supply of goods or services or both, admissibility of input tax credit, determination of the liability to pay tax on any goods or services or both, whether applicant is required to be registered or whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. There is no provision for seeking Advance Ruling in respect of third parties or parties who are not directly connected to the applicant by way of supply of services or goods. The question raised here is not related to the agreement made by them with M/S. WAPCOS or the agreement made between M/s. WAPCOS and M/s. SSNNL but is related to the liability of GST on the consultancy services rendered by various consultancy agencies to SSNNL - the said question to be absolutely irrelevant, hypothetical and speculative which does not in anyway pertain to the services supplied/rendered by the applicant. The second question also irrelevant to the instant issue since it is connected to the first question. No decision can be given in view of the foregoing discussions. Issues Involved:1. Applicability of GST on consultancy services rendered to Sardar Sarovar Narmada Nigam Limited (SSNNL).2. Exemption status and applicable GST rate for sub-consultants if consultancy services are exempted from GST.Detailed Analysis:Issue 1: Applicability of GST on Consultancy Services to SSNNLThe applicant, M/s. Poseidon Hydro Infratech, provides consultancy services and has been subcontracted by WAPCOS Ltd. to perform services for SSNNL. The main consultant, WAPCOS, has a clause in its agreement with SSNNL stating, 'GST at prevailing rates shall be paid extra by the Client.' However, SSNNL has not been paying GST, citing that the consultancy services provided by WAPCOS do not attract GST. The applicant has been paying GST to the government but has not been reimbursed by WAPCOS due to SSNNL's stance.The applicant sought clarification on whether GST is applicable to consultancy services rendered to SSNNL. The relevant legal provisions under Section 97 of the CGST Act, 2017, which govern the applicability of GST and the conditions for seeking an advance ruling, were examined. The Authority for Advance Ruling (AAR) noted that the question posed by the applicant pertained to third-party transactions (between SSNNL and other consultancy agencies) and not directly to the services provided by the applicant.Issue 2: Exemption Status and Applicable GST Rate for Sub-ConsultantsThe second question sought clarity on whether sub-consultants are exempt from GST if the main consultancy services are exempt. The AAR found this question to be hypothetical and speculative, as it was contingent on the resolution of the first issue. Since the first issue was deemed irrelevant to the applicant's direct services, the second question was also considered irrelevant.Conclusion:The AAR concluded that it could not provide a decision on either question due to the hypothetical nature of the queries and their irrelevance to the applicant's direct services. The ruling emphasized that the purpose of seeking an advance ruling is to clarify issues directly related to the applicant's activities and not third-party transactions. As a result, no decision was given on the applicability of GST to consultancy services rendered to SSNNL or the exemption status and applicable GST rate for sub-consultants.Ruling:1. Question-1: No decision can be given regarding the applicability of GST on consultancy services rendered to SSNNL.2. Question-2: No decision can be given regarding the exemption status and applicable GST rate for sub-consultants.