2018 (7) TMI 1334

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....ce of the obligations under its contract with Esprit Germany. 3. Under the agreement, Esprit is appointed by EDCFE to provide services to EDCFE in relation to goods and merchandise including wearing appreal, shoes & accessories and. A brief description of the functions/responsibilities of EDCFE and Esprit Germany and Esprit India is listed below; S.No. Functions/Activities Role of EDCFE/Esprit Germany Role of Esprit India 1. Market research No role Esprit India conducts market research to understand market dynamics, gather pricing information from different suppliers and advise on the best available combination of price, quality and delivery of the goods for Esprit Germany. 2. Purchase of goods and trademark protection Esprit Germany directly purchases goods from Indian suppliers Esprit India performs its functions as a sub-sourcing contractor of and does not purchase the goods or trade its own name. It assists in protection of trademark which includes ensuring that suppliers execute all trademark confirmation letters, comply with the trademark protection procedures and comply with the sourcing principles as adopted by Esprit Germany/EDCFE. 3. Identification of supp....

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....RSONAL HEARING - 2nd PROVISO TO SECTION 98(2) OF CGST/HGST ACT, 2017 5. Personal hearing in the instant case was conducted on 09.04.2018, which was attended by Sh. Nitin Agrawal Power of Attorney Holder, M/s. Esprit India Pvt. Ltd. He reiterated the submissions made in their application for advance ruling after detailed discussions, the decision was reserved which is being released today. DISCUSSION AND FINDINGS OF THE AUTHORITY 6. As regards the taxability of taxability of above staked services provided by Esprit India to ITS associate concern in Hong Kong EDCFE under GST regime, it is observed that as per as per Explanatory Notes to the Scheme of Classification of Services read with Notification No. 11/2017-Central Tax (Rate) dt. 28/07/2017 (as amended), the services enumerated by the applicant in tabular form as given above, qualify as taxable services, in the following manner and chargeable to GST under forward charge. S.No. Functions/Activities Role of EDGE/Esprit Germany Role of Esprit India SAC & Description Taxability 1. Market research No role Esprit India conducts market research to understand market dynamics, gather pricing information from different suppl....

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.... of intermediaries and brokers; Taxable under forward charge @ 18% [S.No. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dt. 28.07.2017] 5. Inspection quality control Esprit Germany and DCFE, frame guidelines for quality control procedure to be adopted during manufacturing, stock keeping in warehouse and transportation Esprit India based on the guidelines received from EDCFE conducts quality checks at various to stages of production, it also checks whether the goods meet the specification, quality, delivery time, and other requirement of Esprit Germany. 998311 Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management This service code also includes Products development, quality assurance and quality management; plant safety, security and protection Taxable under forward charge @ 18% [S.No. 23(ii) of Notification No. 11/2017-Central Tax (Rate) dt. 28.07.2017] 6. Logistics Products are dispatched by the supplier to Esprit Germany. Esprit India makes logistics arrangement for the goods in accordance with the instructions of Esprit Germany received through EDCFE and assure that all....

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....ient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; From the above, it is evident that whether a transaction is "export of services" or not, is dependent upon the tact as to whether the place of supply of service is out of India or not. Consequently, if the advance ruling authority proceeds ahead with examination and consideration of this fact, discussions and findings on the aspect of "place of supply" will be inevitable. Whereas, Section 97(2) of the CGST/HGST Act, 2017 empowers the Advance Riding Authority to decide the issues, which are as follows:- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input credit of paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicants with respect to any goods or services or both amounts to or results in a supply of goods or servic....