2022 (5) TMI 962 - AAR - GST

Medical conference services classified as professional training composite supply under GST with ITC allowed on supporting services

The AAR Gujarat ruled on GST classification for medical conference services. ISCCM's supply to delegates constituted a composite supply with professional ... Composite supply - principal supply - treatment of composite supply as principal supply under Section 8 - events, exhibitions, conventions and trade shows organisation and assistance services - sponsorship services and brand promotion services - reverse charge mechanism for sponsorship services - input tax credit admissibility under proviso to Section 17(5)(b)(i) - input tax credit under Section 16Composite supply - principal supply - professional service - treatment of composite supply as principal supply under Section 8 - Classification and nature of services supplied by ISCCM to delegates - HELD THAT: - The Authority found that the package supplied to delegates - comprising technical seminars, access to exhibitions, hotel accommodation, cultural programmes, meals and airport transfer - is a composite supply. Applying the indicators of natural bundling and the purposive inquiry as to why delegates attend, the Authority held that the essence and principal element of the package is the imparting of professional knowledge/workshops. Consequently the composite supply to delegates is to be treated as a professional service (principal supply) and classified accordingly (SAC 998399). [Paras 22]ISCCM's supply to delegates is a composite supply whose principal supply is professional service; classified as SAC 998399.Events, exhibitions, conventions and trade shows organisation and assistance services - Classification and nature of services supplied by ISCCM to exhibitors - HELD THAT: - The Authority held that the participation fees charged to exhibitors are for the service of organising the exhibition/trade fair. This activity squarely falls within events/exhibitions/trade shows organisation and assistance services and is classifiable under the relevant SAC entry for such services (SAC 998596). [Paras 23]ISCCM's supply to exhibitors is 'exhibition/trade show organisation and assistance' and classified as SAC 998596.Sponsorship services and brand promotion services - reverse charge mechanism for sponsorship services - Nature and GST liability for brand-promotion/sponsorship packages offered by ISCCM - HELD THAT: - The Authority held that placing name/logo/brand on event materials, souvenir display, time-slot presentations and DVD display constitute sponsorship services rather than a distinct 'brand promotion' supply. Sponsorship services are classifiable under the SAC entry for sponsorship/brand-promotion services (SAC 998397). Further, where the recipient is a body corporate or a partnership firm located in the taxable territory, GST on such sponsorship services is payable by the recipient under the reverse charge mechanism; where the recipient is not a body corporate or firm, ISCCM is liable on forward charge. [Paras 24]Brand-promotion offerings are sponsorship services (SAC 998397); GST is payable on reverse charge by corporate/partnership recipients in taxable territory, otherwise ISCCM pays by forward charge.Input tax credit admissibility under proviso to Section 17(5)(b)(i) - input tax credit under Section 16 - Admissibility of input tax credit claimed by ISCCM on hotel services (including convention), food and beverages, outside caterers, rent-a-cab and event-management services - HELD THAT: - Relying on illustrative guidance and statutory proviso, the Authority held that (i) a hotel's supply to ISCCM for the event is to be viewed as convention service (a composite supply) and ITC is admissible on the bundled invoice under Section 16; (ii) ITC on food and beverages supplied by hotel or outside caterers is available because such inward supplies are used as an element of an outward taxable composite supply (proviso to Section 17(5)(b)(i)); (iii) ITC on rent-a-cab services (for vehicles with seating capacity not exceeding 13) is admissible where used as part of the outward composite supply; and (iv) charges for exhibition stall set-up and tenting are input services used in business and eligible for ITC under Section 16(1). [Paras 25]Input tax credit is admissible to ISCCM on the hotel/convention package, food and beverages (hotel or outside caterers), rent-a-cab services as described, and event-manager services used for exhibition stall set-up and tenting.Final Conclusion: The Authority ruled that ISCCM's supply to delegates is a composite supply with professional service as the principal supply (SAC 998399); supplies to exhibitors are event/exhibition organisation services (SAC 998596); brand-promotion offerings are sponsorship services (SAC 998397) with reverse-charge liability on corporate/partnership recipients in the taxable territory and forward-charge liability on ISCCM if the recipient is not a corporate/firm; and input tax credit is admissible on the specified inward supplies used as elements of the outward taxable composite supplies. Issues Involved:1. Nature of service and classification for services provided by ISCCM to delegates and exhibitors.2. Nature of service and classification for brand promotion packages offered by ISCCM.3. GST liability on sponsorship services.4. Admissibility of Input Tax Credit (ITC) for ISCCM on various services.Issue-wise Detailed Analysis:1. Nature of Service and Classification:- Service to Delegates: ISCCM provides a composite package to delegates, including technical seminars, exhibition access, accommodation, cultural programs, meals, and airport transfers. The principal supply is identified as professional service supply, classified under SAC 998399.- Service to Exhibitors: ISCCM organizes trade fairs and exhibitions where exhibitors showcase their products/services. The participation fees are for organizing the exhibition, classified under SAC 998596 as 'events, exhibitions, conventions and trade shows organization and assistance services.'2. Brand Promotion Packages:- Nature and Classification: ISCCM offers brand promotion packages including branding on various materials and presentations. These services are classified under SAC 998397 as 'Sponsorship services and brand promotion services.'- GST Liability: The GST liability for sponsorship services falls on the service recipient if the recipient is a body corporate or partnership firm located in the taxable territory, under the reverse charge mechanism as per Notification 13/2017-CT(R) dated 28-6-17. If the recipient is not a body corporate/firm, ISCCM must pay GST on a forward charge basis.3. Admissibility of Input Tax Credit (ITC):- Hotel Services: ITC is admissible on services provided by the hotel, including accommodation, food, and beverages, as these are used in the course of business and are part of a taxable composite supply.- Food and Beverages by Outside Caterers: ITC on these services is admissible under Section 17(5)(b)(i) of the CGST Act, as they are used for making an outward taxable supply.- Event Manager Services: ITC on services like pickup & drop, exhibition stall setup, and tenting is admissible as these are input services used in ISCCM's business.Findings:- ISCCM’s Supply to Delegates: The principal supply is professional service supply (SAC 998399).- ISCCM’s Supply to Exhibitors: Classified under SAC 998596.- Brand Promotion Packages: Classified under SAC 998397.- GST Liability on Sponsorship Services: Falls on the recipient under reverse charge if the recipient is a body corporate or partnership firm; otherwise, ISCCM pays GST on forward charge.- ITC Admissibility: ITC is admissible on hotel services, food and beverages by outside caterers, and event manager services.Ruling:1. ISCCM supplies a composite service to delegates with professional service as the principal supply (SAC 998399).2. ISCCM provides 'Exhibition, Trade show organization, and assistance services' to exhibitors (SAC 998596).3. ISCCM supplies sponsorship services (SAC 998397).4. GST liability on sponsorship services is on the recipient if they are a body corporate or partnership firm; otherwise, ISCCM is liable.5. ITC is admissible for ISCCM on the specified services.