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2018 (12) TMI 1006
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....he said activities qualify as export of service in accordance to Section 2(6) of the Integrated Goods and Service Tax Act 2017 read With the said Tax Acts?" At the outset, we would like to make it clear that the provisions of both the CGST Act and the GST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus - STATEMENT RELEVANT HAVING A BEARING ON QUESTIONS ON WHICH ADVANCE RULING IS REQUIRED BACKGROUND: A. Sabre Travel Network (India) Pvt. Ltd. (hereinafter referred to as 'Applicant/Sabre India'), situated at 14th Floor, Urmi Estate, 95, Ganpatrao Kadam Marg, Mumbai - 400013, is a private limited company incorporated under the Companies Act, 1956. It is a wholly owned sub....
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....greement dated 31 October 2016: According, while marketing access to the CRS Software, the sales team of the Applicant approaches potential subscribers in India to whom they explain the features of the CRS Software and the flexibility of same to integrate with the potential subscriber's system for smooth functioning; Thereafter, in the event of a positive response, the Applicant scans the credentials and the business potential of the subscriber to whom it proposes to market the CRS Software; Based or an organizational and workflow analysis of the subscriber and following a background check of their prior activities, the applicant logs on a request into the system through the website maintained by Sabre APAC called Subscriber Communication Management System. This is an automated process wherein a request is placed by the Applicant to create a Pseudo City Code; Simultaneously, provided the subscriber agrees to use the CRS Software, order forms are collected from them to begin the process for activation of the CRS Software following the creation of the Pseudo City Code; If the subscriber meets all the criterion set forth by Sabre APAC for subscription, it is registered successfully....
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.... manner to Sabre APAC, and for consideration the Applicant raises a consolidated monthly invoice for the fees to be received from Sabre APAC for all the services rendered to them. The said fees, which is received in the form of convertible foreign exchange, is calculated on a cost plus a mark-up basis as per the terms of the said Marketing Agreement. Further, the amount so received is in accordance to the domestic arm's length requirements under the local transfer pricing laws. Hereto annexed and marked as 'Exhibit B" are sample copies of invoices issued to Sabre APAC. I. Basis the above facts, the various roles and responsibilities of the Applicant and Sabre APAC Under the Marketing Agreement dated 31 October 2016 are distinguished below: Sr. No Functions Duties of Sabre APAC Duties of Applicant 1. Strategic Management functions Planning, formulating and implementation of business goals and vision inter alia based on inputs from the Applicant No participation of the Applicant. 2. Engaging distributors including partners and resellers Directly enters into contract with national marketing companies to undertake various services including marketing....
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....ers Access to the CRS Software, by the allotment of Pseudo CRS Software City Code, is permitted by Sabre APAC The Applicant provides marketing support services in relation to which may include grievance redressal service, repairs and maintenance services, etc. 8. Promotional Activity Involved, as may be required on case to case basis Use of any and all advertising and promotion techniques, service and support, promotion materials, participation in trade shows, sponsorship services, etc. 9. Advising on marketing strategies and local market conditions Formulation and adoption of strategies, based on inputs of the Applicant Advise Sabre APAC on any changes in market, organization, any political, financial, legislative, industrial or other events in within the prescribed territory of India. 10. Provide information on market trends, competitors, and new products and services in the Territory Decision making based on inputs received from the Applicant Advise Sabre APAC on any changes in market, organization, any political, financial, legislative, industrial or other events in within the prescribed territory of India. J. Further, Article 11 of ....
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....eing undertaken by the Applicant. Thus, an advance ruling can also be sought on the activity of supply of marketing and promotion services being undertaken by the Applicant. Further, the Applicant submits that the question for which an advance ruling is sought in the present case, is not pending before any Goods and Service tax Officer, the Appellate Tribunal or any Court. Further, to best of knowledge of the Applicant, the said question of law has not already been decided by' the Appellate Tribunal or any court. As a result, the restriction as prescribed under Section 98(2) of the CGST Act With respect to issues already pending or decided under other provisions of the CGST Act would not apply in the present case. Therefore, in accordance with the legal provisions under Chapter XVII of the CGST Act, 2017 the Applicant is of the view that the present Application to 'determine the liability to pay tax on services' as prescribed under Section 97(2)(e) of the CGST Act is maintainable before the Authority. APPLICANTS INTERPRETATION OF LAW AND FACTS The principal question raised by the Applicant is whether the the marketing, promotion and distribution services (hereinafter re....
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....ax regime where the taxable event was identified on specific events such as manufacture, sale or provision of service; under the provisions of the GST Acts, all such events have been Subsumed under the single umbrella of supply as prescribed under Section 7 of the CGST Act. 1.3.2 It is submitted that for a service to qualify as supply under Section 7 of the CGST Act, It is necessary for the provision of the same to occur in the normal course of business and within the taxable territory of India, The burden of tax is only on the final consumer. Further the scheme of the Acts is that no taxes should be exported outside the territory of India. The charge under the Acts is not on business but on the consumer, and being a destination based consumption tax the place of supply of goods or services plays a vital role in determining the eligibility to tax. 1.3.3 Based on the facts presented above, the objective and the intent of the parties under the Marketing Agreement dated 31 October 2016 is that the services are to be rendered by the Applicant from India to Sabre APAC situated in Singapore. This is an inter-state supply as defined under Sec 13 of the IGST Act, 2017 read with Sec 2....
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.... service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8". Herein the term 'establishment of distinct persons' has been explained in explanation 1 under Section 8 of the IGST Act which read as follows: "Explanation 1 .-For the purposes of this Act, where a person has, - (i) an establishment in India and any other establishment outside India; (ii) an establishment in a state or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. 1.5.2 Taking the above into consideration, it is relevant to examine the conditions for export of services as prescribed under Sect....
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....ct. iv) The payment for such services is received in convertible foreign exchange: the consideration for the services rendered to Sabre APAC is received in convertible foreign exchange. Sabre India Charges a fee on a cost plus markup basis in US Dollars which the Applicant is entitled to irrespective of the number of booking made on the said CRS Software by the Subscribers viz. travel agent. The Foreign Inward Remittance Certificates ("FIRC') showing that the receipt of consideration is in convertible foreign exchange is annexed and marked as Exhibit-E. v) The supplier of service and the recipient of service gre not merely establishments of a distinct person in accordance with Explanation 1 in Section 8 of the IGST Act: The Applicant is located in India and Sabre APAC is located outside India. Thus, the Applicant and Sabre APAC are distinct entities as per the terms of explanation 1 in Section 8 of the IGST Act. Moreover, they undertake operation in their own capacity on principal to principal basis and are not merely establishments of distinct persons. 1.53 It is submitted that the main service of the Applicant under the Marketing Agreement is solely to provide market acc....
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....rt to facilitate or arrange the supply of goods or services by Sabre APAC to the subscribers. Herein a reference can be made to Article 11 of the Marketing Agreement enclosed as Exhibit A. 2.4 The said Article 11 reads as follows: "Nothing in this Agreement is intended to or shall operate to create a partnership or joint venture of any kind between Sabre APAC and Sabre India, or to authorize either Sabre APAC or Sabre India to act as agent for the other, and neither Sabre APAC or Sabre India shall have authority to act in the name or on behalf of or otherwise to bind the other in any way (including, without limitation, the making of any representation or warranty, the assumption of any obligation or liability and the exercise of any right or power)." 2.5 To ascertain whether the services provided by the Applicant are covered under the definition of 'intermediary or not, it is pertinent to analyze the term 'intermediary' in detail vis-a-vis activities performed by the Applicant as per the agreement entered into with Sabre APAC. 2.6 In terms of provisions of Section 2(13) of the IGST Act, 'intermediary' means a broker, an agent or any other person, by whatever name called....
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....ve of on behalf of their principal. Therefore, it can fairly be concluded that a principal - agency relationship between persons forms the core requirement of an agent or a broker. 2.11 Besides, the last phrase in the means clause of the definition of 'intermediary' contains the clause "or any other person, by whatever name called". The most appropriate rule of interpretation which is to be used while interpreting the phrase 'by whatever name called' is the principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. 2.12 Thus, applying the interpretative rule of Ejusdem Generis, the phrase 'by whatever name called' will include a person in the same genus as that of a broker or an agent. In other words, the phrase "'by whatever name called', will mean a person who is also appointed in a representative capacity. 2.13 Further, the second element of the definition provides the na....
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....tion or arrangement of services by the Applicant between Sabre APAC and the Subscriber. The Agreement does not facilitate nor does it enable the facilitation of any supply of services between Sabre APAC and the Subscriber. There is no privity of contract between the Applicant and the Subscriber namely travel agent in India where by the Applicant is under any obligation or duty owed to the Subscriber in terms of the arrangement with the Sabre APAC under the Marketing Agreement 2.19 Hence, the Applicant does not qualify as an 'intermediary' as per Section 2(13) of IGST Act. Moreover, considering the principal to principal character of the agreement, the Applicant provides marketing, promotion and distribution Services in relation to the CRS Software only tb Sabre APAC and not to any other party. 2.20 Given that the definition of 'intermediary' under the IGST Act is largely in line with the definition of intermediary under the erstwhile Service Tax Legislation (Finance Act, 1994), the guiding principles provided under Education Guide released by Central Board Of Excise and Customs under the erstwhile Service Tax legislation for determining whether a person acts as an intermediar....
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....pplicant with the mark up as provided in para 5.1 of the Marketing Agreement will have to be paid by SABRE APAC to Sabre India. It is settled law that the person who is entitled to the receipt of service and who has the obligation to pay for the said service alone is the service receiver and no other person even if such other person were to indirectly benefit from the provision of the main service. • Identity and title: The third principle indicates that the service provided on behalf' of the principal is clearly identifiable. The Applicant submits that as per Article 11 Of the Agreement, the relationship between the parties is Clearly restricts the performance of the activity in the nature Of Agent. Therefore the Applicant submits that no services is provided by the Applicant on behalf of Sabre APAC The activities performed by the Applicant directly to Sabre APAC is only on a principal to principal basis. 2.22 Accordingly, the services rendered by the Applicant do not satisfy any of the guiding principles laid down under the erstwhile Service Tax regime in relation to intermediary services. 2.23 In the light of the above detailed analysis and discussions, it is ....
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....AC would accept or reject the orders received from customers. They would depend upon various other business factors taken into consideration by Sabre APAC. The decision to allow or reject access solely rest With the Sabre APAC. • The Applicant plays no role in enabling Sabre APAC and the subscriber to enter into contract for access of CRS Software except feeding the information via the system to enable Sabre APAC register the admitted and only supports in providing product related information and engages in discussion as required by Sabre APAC. • Consideration for the service rendered is based on costs incurred by the Applicant in supplying services plus a pre-agreed mark-up which is independent of actual value / volumes of services, if any, ultimately provided by Sabre APAC. This evidences that the Applicant receives fee for provision of services to Sabre APAC and not any commission as in case of agency relationship and hence, does not arrange or facilitate any supply of services to Sabre APAC. 2.26 In light of the above detailed analysis and discussions, it is submitted that, the services SABEN provided by the Applicant are limited to marketing, promo....
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....promotion, sponsorships and other related support services are of a supplementary nature which facilitate the provision of the marketing and promotion services rendered by the Applicant to Sabre APAC. Therefore, said service of marketing access to the CRS Software is of principal nature with the other services being supplementary to it, as the other marketing support services cannot be rendered in the absence of the marketing services provided by the Applicant under the Marketing Agreement. 3.6 Further, such services are not peculiar to the Applicant's case and similar services are provided by various Indian entities to their overseas customers as a single package. Besides, for the provision of the said services, the Applicant issues a Single consolidated monthly invoices on a cost plus markup basis for the entire bundle of services, irrespective of the nature of actual supplies made during the said period. Consequently, the services of marketing, consultancy, promotion, sponsorships and other related support services provided under the Marketing Agreement are naturally bundled and supplied in conjunction with each and can be classified as a 'composite supply'. SUMMARY OF INT....
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....he Applicant reserves their right to modify, rescind or alter any part of submissions and to place additional evidence in support of their contention at the time of personal hearing. WRITTEN SUBMISSION AT THE PERSONAL HEARING ON 10 JULY 2018 Brief Background: A. Applicant is private limited company engaged in the provision of marketing, promotion & distribution of the Computer Reservation System Software ('CRS Software') within the territory of India. The CRS Software has been developed by Sabre GLBL Inc. as a global distribution system which performs various functions including airline seat reservations, scheduling, automated ticketing & fare displays, booking for a variety of air, car & hotel services, etc. B. Sabre APAC, the Applicant's parent company situated in Singapore, has been sub-licensed the right to market and promote the said CRS Software for Asia specific jurisdictions. Further, it has been authorised to further sub-license certain parts of its marketing rights and obligations to local-country distributors. Accordingly, Sabre APAC has appointed the Applicant as the National Marketing Company vide a Marketing Agreement dated 31 October 2016 pursuant to whic....
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....otential customers and once the said customer is accepted by Sabre APAC, it provides after-sales services as may be required. Further, all promotion and marketing support services provided by the Applicant is towards the objective of building the customer base of the CRS Software in India or in relation to the same. Hereto annexed and marked as "Annexure 1" is a scope of the services rendered by the Applicant under the said Marketing Agreement dated 31 October, 2016. 1.2. With respect to the services supplied by the Applicant, a reference is made to para 1.5 of the Application which deals with the nature of the Agreement entered by the parties and the services rendered thereunder which constitutes export of services by the Applicant to Sabre APAC as per Section 2(6) of the Integrated Goods and Service Tax Act, 2017 (IGST Act). 1.3. Accordingly, GST being a destination based consumption tax, the liability to discharge tax shall not arise in cases where the consumption of the supply is outside the taxable territory of India. As a result, in the present case, the Applicant would be eligible to avail the benefit of zero-rated supplies as are available to exports under section 16 ....
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.....com LLC ('GoDaddy US') in lieu of a proposed Service Agreement. In the said ruling, it was held by the Hon'ble Authority for Advance Ruling that the GoDaddy India was providing services on their own account to GoDaddy US and not to the Indian customers of GoDaddy US. Hence, the place of provision of service would be outside India in terms of Rule 3 of the place of Provision of Services Rules, 2012 and these services would qualify as export under Rule 6A of the Service Tax Rules. The relevant extract of the said advance ruling reads as follows: "14**** However, applicant is providing to GoDaddy US services viz.; direct marketing and promotion services, supervision of quality of third party customer care center services and payment processing services, as per draft Service Agreement between the applicant and GoDaddy US. There is no contract between the applicant and the customers of GoDaddy US based in India. GoDaddy US have used said services provided by the applicant as per the draft Service Agreement. Further, applicant would charge a fee equal to the operating costs incurred by the applicant plus a mark-up of 13% on such costs, which would be received by the applicant from....
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.... ADVANCE RULINGS. 1.7. With respect to the above, it is submitted that the criterion for the determination of export of services under the erstwhile service tax provision was similar to the provisions under the IGST Act. In this context, is may be relevant to refer to the CESTAT order in the case of Principal Commissioner of Central Excise -I v. Advinus Therapeutics Ltd reported in 2016-TIOL-3138-CESTAT-MUM = 2016 (12) TMI 34 - CESTAT MUMBAI wherein the Hon'ble Tribunal on the question of whether a transaction which enjoyed the benefit of export of service for the period prior to 2012 (before the Negative List) would have a different treatment under the new Rules answered as follows: 12. It is an admitted fact that the respondent had been rendering services that were, in the erstwhile pre-negative list regime, taxable but for the provider being a Export Oriented Unit under the entry in section 65(105)(za) of Finance Act, 1994. In the scheme of Export of Service Rules, 2005, the various taxable services had been categorized as object-based, performance-based and recipient-based for the purpose of exemption under section 93 of Finance Act, 1994. Though those Rules are no longer....
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....n the judgment that the tax was intended as a levy on activities that would otherwise be performed by the recipient for itself. The new industry of hiving out or outsourcing of what was, conceivably, being done within the enterprise was intended to be subject to the new levy. In the matter of service rendered by respondent, this activity could, but for commercial viability, well be executed by the recipient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfillment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of rule 4 of Place of Provision of Services, 2012, the performance of service being rendered outside India would render it to be an export. **** 1.8. By this elaboration, we have amplified our earlier decision in (re Sai Life Sciences Ltd) that it is contrary to law to isolate an expression in a rule to deny t....
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....authority on the Applicant, nor is there any other authorising document establishing agency between the Applicant and Sabre APAC. Thus, the services rendered by the Applicant are on a principal to principal basis and qualify as export as export of services and the same cannot be considered to be intermediary services as per Section 2(13) of the IGST Act. 2. Submission with interpretation of the term intermediary services under Section 2(13) of the IGST Act 2.1. Section 2(13) of the IGST Act, defines an intermediary to mean "a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services on his own account." 2.2. It is submitted that the above definition can be divided into three parts, viz. (i) the means clause defining the nature of the service provider (ii) the nature of services provided and (iii) the exclusionary part which carves out an exception for the "person who supplies such goods or services on his own account." 2.3. NATURE OF THE SERVICE PROVIDER 2.3.1 Based on the abov....
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....e words are unclear or ambiguous, aid of other rules of interpretations must be used. 2.3.5. The most appropriate rule of interpretation which is to be used while interpreting the phrase 'by whatever name called' is the principle of 'ejusdem generis'. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words 'ejusdem generis' mean 'of the same kind or nature'. 'Ejusdem generis' is a rule of interpretation whereby when a class of things is followed by general wording that is not itself expansive, the meaning of the general words are taken to be restricted by implication with the meaning of restricted words. 2.3.6. The rule of 'ejusdem generics' is applied in the following cases: • The statute enumerates the specific words • The subjects of enumeration constitute a Class or category • That class or category is not exhausted by the enumeration • The general terms following the enumeration, and • There is no indication of a different legislative intent. 2.3.7. In the case of CIT v. Rani Tara Devi reported in [2013] 355 ITR 457 (P & H) = 2013 (3) TMI ....
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....ncial services' appearing under section 65(12)(a)(ix) is a residuary entry and includes; those services which are normally rendered by banks or financial institutions" (emphasis supplied) 2.3.10. Thus, applying the principle laid down by the Hon'ble Supreme Court, supra, and the interpretative rule of 'ejusdem generis', the phrase 'by whatever name called' will include a person in the same genus as that of a broker or an agent. In other words, the phrase 'by whatever name called', Will mean a person Who is also appointed in a representative capacity. 2.4. NATURE OF THE SERVICE 2.4.1. It is submitted that the said portion defines the nature of transactions which if provided by a broker or an agent or by any person (by whatever name called) would be covered under the services provided by an 'intermediary'. As per the definition the broker, agent of any other person will arrange for the provision of service or facilitates the provision of a service (or supply of goods) between two or more persons. The words that have been used in the definition are - (i) arranges and (ii) facilitates, As a result, it would be pertinent to understand the meaning of these words. The said two....
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....om the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as 'commission! Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable." 2.4.7. The Applicant clearly does not fulfil the above conditions prescribed in CBEC Education Guide and Cannot be treated as an intermediary as per the inclusionary part of the definition under Section 2(13) of the IGST Act. The Applicant draws support from the Statement at the end of para 5.9.6 of the CBEC Education Guide which, in the context of 'Intermediary Service' gives the following example: "Similarly, persons such as call centres, who provide services to their clients by dealing with the customers of the Client on the client's behalf, but actually provided these services on their own account, will not be categorized as intermediaries." 2.4.8. The Applicant would also like to refer to judgments under the UK VAT law, where the question of activities carried Out by an 'intermediary' had been analysed. The relevant extract of the said judgem....
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....ilitating telecommunication and data services for trading of loan and insurance leads. In other words, the assessee was engaged in providing an open market for purchase/ sale of loans and insurance products from brokers via its internet based bidding system. The relevant para of the judgement is extracted hereunder for the ease of reference: "16. The Appellant's relationship with the seller and buyer was governed by the same generic contract. Under the contract the appellant granted the seller and buyer a non-exclusive licence to use the Appellant's software platform in return for consideration which consisted of 10 per cent of the fee charged by the seller, and a commission of 15 per cent on the price paid by the buyer. The consideration was not dependent upon the buyer completing a contract for credit or insurance but triggered when the requirements for a chargeable lead were met. *** 41. ***The Appellant's contact with potential consumers was for the purpose of enhancing the marketability of the lead not to secure a financial product for the consumer or to match him with the most appropriate broker. I find that the Appellant's supplies were about selling leads, not a....
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....iation means carrying out all the necessary activities end to end which would entail two parties to enter into a contract, without the negotiator having any interest of his own in the terms of the contract. 2.4.12. The above-mentioned principles can be applied into the present factual matrix to determine whether the Applicant qualifies as an intermediary'. Thereby, as per the various clauses of the Marketing Agreement between the Applicant and Sabre APAC, the following factual position emanates: • The Applicant is providing business support services and allied activities to Sabre APAC • Services provided by the Applicant are preparatory and supportive in nature rather than facilitating any provision of services by Sabre APAC • No payments are routed through the Applicant. • The Applicant merely supports and has no right to actually negotiate, finalize or change the price already fixed by Sabre APAC. 2.4.13. Also, considering the bi-partite nature of the Marketing Agreement, the Applicant provides marketing, promotion and distribution services only to Sabre APAC and not to any other party. Further, for the provision of the sa....
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....ract service tax. Here, it is presumed that ancillary freight services (i.e. services ancillary to transportation- loading, unloading, handling etc) are "bundled" with the principal service owing to a single contract or a single price (consideration).***" 2.5.3. Thus, even persons who provide services to their clients by dealing with the customers of their client on the client's behalf, but actually provided these services on their own account, will not be categorized as intermediaries under the said definition. Accordingly, in the present case, even if it is assumed that the Applicant arranges' or 'facilitates' the supply between Sabre APAC and its customers, since all the services are rendered by the Applicant to Sabre APAC on a principal-to-principal basis, the services would get covered under the exclusionary clause of the said definition under Section 2(13) of the IGST Act. Herein reliance is also placed on the ruling in the case of Global Transportation Services Pvt. Ltd. reported in 2016 (45) STR 574 (AAR) = 2016 (9) TMI 291 - AUTHORITY FOR ADVANCE RULINGS. 2.5.4. It is further submitted that the relationship of the Applicant with Sabre APAC is separate from the relati....
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....could at the same time act as an agent and also on principal to principal basis with respect to the same line of activity. (i) Greenwich Meridian Logistics (I) Pvt. Ltd. v. CST, Mumbai [2016 (43) STR 216 (Tri. - Bom.)] = 2016 (4) TMI 547 - CESTAT MUMBAI (ii) Phoenix International Freight Services Pvt. Ltd. v. CST, Mumbai - II (2017 (47) STR 129 (Tri. - Mum.)] = 2016 (9) TMI 585 - CESTAT MUMBAI 2.5.9. Therefore, the services rendered by the Applicant are not classifiable as under Section 2(13) of the IGST Act, the same being rendered by the Applicant's on its own account. 2.6. In view of the facts and the legal provisions, the Applicant respectfully submits that the services rendered by them to Sabre APAC would would be treated as an export of services under Section 2(6) of the IGST Act and hence not be non-taxable for the purpose Of payment of GST under the provisions of GST Law. Details of the Marketing Agreement dated 31 October 2016 1. Backgound: 1.1. The Applicant, viz. Sabre Travel Network India Pvt Ltd, has obtained a non-exclusive, royalty-free right and license from its parent company i.e., Sabre APAC, to distribute the CRS Software in India vide ....
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....provided the subscriber agrees to use the CRS Software, order forms are collected from them to begin the process for activation of the CRS Software following the creation of the Pseudo City Code; It the subscriber meets all the criterion set forth by Sabre APAC for subscription, it is registered successfully and a Pseudo City Code is allotted in its favor. Once the Code is allotted and the setup is activated, the Applicant's engineers install user interfaces to access the CRS Software in the subscriber's computer systems. 2.4. In this manner, once the organizational and workflow analysis is complete, the Applicant undertakes reporting of the results in the Subscriber Communication Management System owned by Sabre APAC. Consequently, the scouting of potential subscribers and the said organizational and workflow analysis of such potential subscribers are the deliverables by the Applicant which is submitted in the Subscriber Communication Management System in the form of a non-binding request. 2.3. Herein, the responsibility of the Applicant, stands completed on the identification of the potential subscribers to Sabre APAC. Subsequently, their responsibility of providing mark....
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....uthority. M/s. Sabre Network (India) Pvt. Ltd. (hereinafter referred as the Applicant) is private limited company engaged in the provision of marketing, promotion and distribution of the Computer Reservation System Software ('CRS Software') within the territory of India. The CRS Software has been developed by M/s. Sabre GLBL Inc. as a global distribution system which performs various functions including airline seat reservations, scheduling, automated ticketing and fare displays, booking for a variety of air, car and hotel services, etc. Sabre APAC, the Applicant's parent company situated in Singapore, has been sub-licensed the right to market and promote the said CRS Software for Asia specific jurisdictions. Further, it has been authorised to further sub-license certain parts of its marketing rights and obligations to local-country distributors. Accordingly, Sabre APAC has appointed the Applicant as the National Marketing Company vide a Marketing Agreement dated 31 October 2016. pursuant to which the Applicant has been granted a non-exclusive right to market and distribute the CRS Software to various travel agents in India. Under the said Marketing Agreement, the Ap....
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....es on his own account." In their submission dated 17.07.2018, before Adjudicating authority, the applicant submitted their Marketing Agreement dated 31.10.2016, wherein it clearly stated that: 1.1. It is submitted that the Marketing Agreement dated 31 October 2016 creates an obligation on the Applicant to provide marketing, promotion and distribution services to Sabre APAC in relation to the CRS Software, within the territory of India. The Applicant identifies potential customers and once the said customer is accepted by Sabre APAC, it provides after-sales services as may be required. Further, all promotion and marketing support services provided by the Applicant is towards the objective of building the customer base of the CRS Software in India or in relation to the same. As stated above, M/s. Sabre Network (India) Pvt. Ltd. works for Sabre APAC, but does not appears to supply the CR software on his own account and therefore, falls under the services viz. Intermediary Services and the appears liable for tax under IGST Act 2017. None of the case laws, cited by the applicant are applicable to the present case as the facts and circumstances are different. 04. HEARING ....
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....ntial of the subscriber to whom it proposes to market the CRS Software and based on an organizational and workflow analysis of the subscriber and following a background check of their prior activities, the Applicant logs on a request into the system through the website maintained by Sabre APAC called Subscriber Communication Management System. This is an automated process wherein a request is placed by the Applicant to create a Pseudo City Code, Simultaneously, provided a subscriber agrees to use the CRS Software, the applicant collects order forms from the subscriber to begin the process for activation of the CRS Software following the creation of the Pseudo City Code. If the subscriber meets all the criterion Set forth by Sabre APAC for subscription, it is registered successfully and a Pseudo City Code is allotted in its favor. Once the Code is allotted and the setup is activated, the Applicant's engineers install user interfaces to access the CRS Software in the subscriber's computer systems. From the submissions made by the applicant it is clear that they are on the lookout for potential subscribers who are willing to use the CRS software in their business. It is also import....
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....ess, etc. We find from the question posed that the applicant is having doubts as to whether their services are taxable under CGST Act and MGST Act or whether their services are exempt under the IGST Act, being export of services. To arrive at a decision we first take up the definition of an intermediary as per GST laws. The term 'Intermediary' is defined in Section 2(13) of IGST Act, 2017 as:- 'intermediary' means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account" From the above definition we find that an intermediary can be a broker, an agent or any other person and either facilitates the supply of goods and/or services between two or more persons and who cannot change the nature of supply as provided by the principal. From the facts before us we find that the applicant is covered by the said definition of an intermediary because they are definitely acting as a broker/ agent, etc and facilitating the process for sale of CRS Software belon....
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....supplier of service is located in India and the recipient of Service i.e. supplier of goods is located outside India, Section 13 of the IGST Act, 2017 would be applicable to determine the place of service. As per Section 13 (8) (b) of the said Act, the place of supply of Intermediary Services shall be the location of the supplier of services, in this case, the applicant. Since the place of supply of services in the instant case is in taxable territory, the said intermediary services cannot be treated as export of services under the provisions of the GST laws. In order to classify as 'export of service', as per section 2(6) of the Integrated Goods and Service Tax Act, 2017, one of the crucial condition as contained under sub-clause (iii) requires that the place of supply of service should be outside India. In the subject case, the place of supply shall be location of the supplier of services and therefore such 'intermediary services' cannot be classified as 'export of services'. We now discuss Inter-state provisions as well as Intra State provisions under the GST laws as follows:- Inter State provisions are contained under section 7 of the Integrated Goods and Service Tax A....