2021 (7) TMI 653 - AAR - GST

Court rules online & offline tendering as Supply of Services under CGST Act.

The court classified both online and offline tendering as a Supply of Services under the CGST Act, 2017. Online and offline tendering activities were ... Supply of Services - Supply of Goods - Online tendering - Offline tendering - classification under services heading 9997 - miscellaneous services including services nowhere else specified - exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - registration activitiesOnline tendering - Supply of Services - Online tendering is a supply of services. - HELD THAT: - The Authority examined the nature of e-tendering as an internet based process in which tendering activities (application, fee payment, submission of bids) are mediated by information technology. The definition of goods does not encompass such intangible, IT mediated processes, whereas the legislative scheme (including the IGST definition of online information and database access or retrieval services) treats such automated, internet mediated deliveries as services. Consequently, online tendering does not satisfy the definition of goods and falls within the scope of service. [Paras 5]Online tendering will be considered as supply of services.Offline tendering - Supply of Services - Offline tendering in its entirety is a supply of services. - HELD THAT: - The Authority found that offline tendering also involves intangible components (sale of tender form, application, fee payment, submission and processing of bids) and does not amount to a transfer of goods. Given the inclusive and wide definition of service under the GST Act and the inability to characterise the offline tendering process as 'goods' in its entirety, offline tendering is to be treated as the rendering of services. [Paras 5]Offline tendering will be considered as supply of services.Classification under services heading 9997 - Online tendering - Online tendering is classifiable under services heading 9997. - HELD THAT: - The GST services tariff (Chapter 99, headings 9954-9999) does not specifically mention online tendering. As online tendering is a service not otherwise specified, the Authority held that it falls under Heading 9997 which covers other miscellaneous services including services nowhere else specified. [Paras 5]Online tendering should be taxed under services heading 9997.Classification under services heading 9997 - Offline tendering - Offline tendering is classifiable under services heading 9997. - HELD THAT: - Applying the same approach as for online tendering, and noting that offline tendering is likewise not specifically listed in the services tariff, the Authority concluded that offline tendering qualifies as a miscellaneous service falling under Heading 9997. [Paras 5]Offline tendering should be taxed under services heading 9997.Miscellaneous services including services nowhere else specified - Tendering - Tendering (online or offline) is a miscellaneous service and not an administrative or specially listed service for the purposes of the ruling. - HELD THAT: - Although the specific categorisation as 'administrative' versus 'specific' service was not within the provisions enumerated for advance ruling, the Authority has already held that both modes of tendering are services falling under Heading 9997. Therefore, tendering is to be regarded as miscellaneous services (services nowhere else specified) rather than a separately enumerated administrative service for the purpose of classification in this ruling. [Paras 5]Tendering will be considered as miscellaneous services including services nowhere else specified.Exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - registration activities - Activities of the Maharashtra State Dental Council and the registration fees under Rule 73 are not exempt under Notification No. 12/2017. - HELD THAT: - The Authority examined whether the Council's activities fall within the description of services exempted in the cited notification. The services rendered by the applicant were not found to be specifically covered by the entries in the notification's table. Consequently, the receipt of registration fees payable under Rule 73 of the Bombay Dentists Rules, 1951 is not exempt from GST under that notification. [Paras 5]The activities are not exempt under Notification No. 12/2017 and the registration fees are not exempt from GST.Final Conclusion: The Authority ruled that both online and offline tendering constitute supplies of services; both are classifiable under services heading 9997 as miscellaneous services (services nowhere else specified); the question of administrative versus specific service is answered by that classification; and the Maharashtra State Dental Council's activities and registration fees under Rule 73 are not exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 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 Online Tendering.4. Appropriate tariff head for Offline Tendering.5. Classification of tendering as administrative services or specific services.6. Exemption status of registration activities conducted by the Maharashtra State Dental Council under GST.Detailed Analysis:Issue 1: Classification of Online TenderingThe judgment clarifies that online tendering is considered as a Supply of Services. It is defined by the CGST Act, 2017, wherein services mean anything other than goods, money, and securities. Online tendering involves processes such as application, payment of fees, and submission of bids, which are conducted online. The judgment emphasizes that online tendering does not meet the definition of 'goods' and aligns with the definition of 'services' as per Section 2(12) of the CGST Act, 2017. Therefore, online tendering is categorized under services.Issue 2: Classification of Offline TenderingOffline tendering is also classified as a Supply of Services. The process involves manual procurement activities such as purchasing tender forms, submitting bids, and paying fees. The judgment highlights that both online and offline tendering processes involve intangible products and services that do not fit the definition of 'goods'. The definition of 'services' under Section 2(12) of the CGST Act, 2017, is inclusive and broad, covering activities other than goods, money, and securities. Thus, offline tendering is also deemed as rendering services.Issue 3: Tariff Head for Online TenderingThe judgment specifies that online tendering should be taxed under Service Heading 9997. This heading covers miscellaneous services, including those not specified elsewhere. Since online tendering is not explicitly mentioned in any other headings, it falls under this category.Issue 4: Tariff Head for Offline TenderingSimilarly, offline tendering is also to be taxed under Service Heading 9997. The judgment reasons that offline tendering, like online tendering, involves services not specifically categorized under other headings. Therefore, it is appropriately classified under the miscellaneous services heading.Issue 5: Classification of Tendering ServicesThe judgment addresses that tendering, whether online or offline, will be considered as 'miscellaneous services including services nowhere else specified'. This classification is made because the specific question does not fall under the clauses mentioned in Section 97(2) of the CGST Act, but the nature of the services aligns with the miscellaneous category.Issue 6: Exemption Status of Registration ActivitiesThe judgment concludes that the activities conducted by the Maharashtra State Dental Council, including registration activities and related activities laid down in the Act, are not exempted under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Consequently, the receipt of the Registering Fees paid by prospective dental practitioners is not exempted from the levy of Goods and Services Tax. The services rendered by the applicant do not specifically find mention in the said notification, hence they are not exempted.Order:1. Online tendering is considered as Supply of Services.2. Offline tendering is considered as Supply of Services.3. Online Tendering should be taxed under Service Heading 9997.4. Offline Tendering should be taxed under Service Heading 9997.5. Tendering will be considered as 'miscellaneous services including services nowhere else specified'.6. The registration activities conducted by the Maharashtra State Dental Council are not exempted from GST.