TaxTMI 
TaxTMI 
2019 (7) TMI 1105
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....85 or "Intermediary service" classifiable under SAC 9961 / 9962 or any other heading? 3) Whether the Marketing services to be provided by the Applicant will be an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? 4) Whether the Handholding services to be provided by the Applicant will be an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further, henceforth for the purposes of this Advance Ruling, a reference to "GST Act" would means CGST Act / MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "Mayank Jain (hereinafter referred to as the "Applicant") is an individual exploring business opportunity in providing marketing and advisory services in relation to the Employee Based Immigration: ....
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....licant under the Foreign Immigration Advisor to the Consultant Manager constitutes a supply of "Support services" classified under SAC 9985 or "Intermediary service" classifiable under SAC 9961 / 9962 or any other heading? Statement of facts having a bearing on the question The scope of the services to be provided by the Applicant to the Consultant Manager have been provided under the agreement at Clause I(a) read with Exhibit A hereto. A bare reading of the relevant clauses supra would show that the Applicant is engaged in providing pure marketing services for the benefit of the Consultant Manager. Further, the Applicant is an independent service provider providing services at his own risk and cost. It is also expressly provided therein that neither party shall represent itself to be the agent of the other nor shall either party accept service of legal process or create or assume any obligation of any kind or nature whatsoever on behalf of the other party. Neither shall have the authority to conclude or negotiate any contracts or secure any orders on behalf of each other. As a matter of fact, the Applicant will never negotiate or enter into any contract with any prospective cu....
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....levant extract of the various dictionary definitions are as follows: a. Halsbury's Laws of England, 4th Edition, Volume 1, Para 712, Page 424: - A mercantile agent who in the ordinary course of his business is employed to make contracts for the purchase or sale of property or goods of which he is not entrusted with the possession or documents of title [Alapati Ramamurthi, Gelli Krishnamurthy & Co. Vs. J. Ramanujan and Ors. (AIR 1961 AP 408)]. = 1960 (7) TMI 66 - ANDHRA PRADESH HIGH COURT b. Concise Law Dictionary (2008 Edition): - A middlemen or an agent who for a commission on the value of the transaction, negotiates for others the purchase or sale of stocks, bonds, commodities, or property of any kind; or who attends to the doing of business for another; c. Law Lexicon Dictionary (Sumeet Malik): - An agent employed to make bargains and contracts between other persons in the matters of trade, commerce and navigation, by explaining the intentions of both the parties and negotiating in such a manner as to put those who employ him in a condition to treat together personally; (2) and more commonly an agent employed by one party only to make a binding contract with another. ....
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....jusdem generis was also upheld by the Apex Court in the case of Assistant Collector of C. Ex. Vs. Ramdev Tobacco Company [1991 (51) ELT 631 (SC)] = 1991 (1) TMI 136 - SUPREME COURT and CCE Vs. Shital International [MANU/SC/0884/2010]. = 2010 (10) TMI 19 - SUPREME COURT Similar view has been affirmed in the following cases: i. CIT Vs. Rani Tara Devi [2013 (355) ITR 457 (P&H)]; = 2013 (3) TMI 53 - PUNJAB & HARYANA HIGH COURT ii. Commissioner of Income tax, Udaipur Vs. Mcdowell & Co. Ltd. [MANU/SC/0964/2009] = 2009 (5) TMI 27 - SUPREME COURT 9. In view of the above, it is submitted that the scope of the term "any other person, by whatever name called" will include a person in the same genus as that of an agent or a broker. Thus, on a combined reading of the dictionary meaning of the terms "broker" and "agene' along with the aforementioned judicial precedents, it can be construed that the only persons appointed in representative capacities can be covered within the scope of the first limb of aforesaid definition (Intermediary). 10. As per the second part of the definition, an intermediary "Arranges or facilitates the supply of goods or services or both, or securities between ....
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....amongst these activities mandates there being a communication or any kind of decision making on behalf of the foreign entity. As per the plain words of the Foreign Immigration Advisor Agreement, the Applicant will provide services to the Consultant Manager of his own volition and hence, the services to be supplied by the Applicant to the service recipients fails to comply with the second limb of the definition of the term "intermediary". 14. The activity of sales promotion and marketing are not selling of goods and therefore, such activities would not be classifiable under the said heading. The activities of the Applicant will be in relation to market survey, market intelligence and leads, sales promotion, and customer relation. The Applicant will never participate in the actual sales negotiation or profess to act on behalf of the Consultant Manager or help in concluding the investment by the prospective investor. In other words, the Applicant will not be engaged as an intermediary. 15. At this juncture, it is also submitted that the mere fact that the amount payable by the Consultant Manager for the Marketing services is deferred till successful investment/ repatriation by the ....
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....curity, testing and analysis;" [Negative List regime] 18. From the above, it can be construed that marketing services, advertisement and promotion services, customer relationship management, evaluation of prospective customers, etc. would qualify to be in the nature of support services only. 19. Thus, plainly, the supply of services to be provided by the Applicant would be classified under tariff entry 9985 as "Business Support Service". Question 2:- Whether the Handholding services to be supplied by the Applicant under the Foreign Immigration Advisor Agreement constitute a supply Of "Support services" falling under SAC 9985 or "Intermediary service" classifiable under SAC 9961 / 9962 or any other Statement of facts having a bearing on the question The scope of the services to be provided by the Applicant to the Consultant Manager have been provided under the agreement. In brief, this relates to the second tranche or bucket of services, viz., once the investor has confirmed the proposed investment. In this regard, the Applicant provides hand-holding services such collecting documents, filling out forms, addressing any possible issues or difficulties, as the case may be. A ba....
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....rying out the handholding service. Moreover, the Applicant and the service recipient will have no authority to create nor will they assume any obligation on behalf of each other. The services rendered by the Applicant are limited in this respect. Although the Applicant assists the person of interest in filling of the forms, providing direction to get the necessary security Clearances, and getting together all the financial information required as per the Consulting Manager, these duties are purely procedural and do not at any point in time extend to facilitating the investment itself. In simpler terms, the applicant is acting independently for the benefit of the Consultant Manager and has no role whatsoever to play in respect of the facilitation, negotiations, manner and mode of investment. The handholding service is limited to providing the necessary information so that the application is not left incomplete. At no point is any advice sought or given, and further the Applicant is not privy to the discussions and agreement reached between the Consultant Manager and the customer. Simply put, the Applicant is acting on and for the instructions of the Consultant Manager and nowhere in....
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....ervices to be provided by the Applicant will be as an independent contractor, the Applicant will automatically fall within the exclusion provided in the third limb of the definition. In view of the above, the applicant will not be construed as an intermediary in terms of Section 2(13) of the IGST Act. 10. The Applicant will never participate in the actual sales negotiation or profess to act on behalf of the Consultant Manager or help in concluding the investment by the prospective investor. In other words, the Applicant will not be engaged as an intermediary. It is also pertinent to point out that in no case will the Applicant be the sole point of contact between the Consultant Manager and the customer. This direct connection between the customer and the Consultant Manager negates the contention that the Applicant is an intermediary. Further, the mere act of assistance towards filling out of forms and arranging the files/papers in correct order, or arranging for logistical support for either party to meet does not create any agency relationship between the Consultant Manager and the Applicant. There is no representative capacity that the Applicant fulfils. The Applicant is thus pr....
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....tomers, etc. would qualify to be in the nature of support services only. 14. Thus, the supply of services to be provided by the Applicant would be classified under tariff entry 9985 as "Business Support Service". Question 3:- Whether the Marketing services to be provided by the Applicant will be an export of services as defined under Section 2(6) of the Integrated Goods and Services Tax Act 2017? Statement of facts having a bearing on the question The Applicant will receive payment in freely convertible foreign exchange i.e., United States Dollar. Statement containing the applicant's interpretation of law 1. In this regard I refer to the definition of the term "export of services" as defined under section 2(5) of the IGST Act. The relevant extract is set out hereunder: "(6) "export of services" means the supply of any service when, (i) the supplier of service is located in India; (ii) the recipient of 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 ar....
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.... and the beneficiary of the services rendered is directly the Consultant Manager. d. Condition IV - Payment is received in convertible foreign exchange As mentioned in the foregoing paragraphs, the consideration to be charged by the Applicant will be in convertible foreign exchange i.e. United States Dollar. e. Condition V - Supplier of service and recipient of service are not merely establishment of distinct person Explanation 1 to Section 8 inter alia provides that where a person has an establishment in India and any other establishment outside India, then such establishments shall be treated as establishments of different legal persons. The term person has been defined to include a Company. In the instant case, the service recipient i.e. Consulting Manager is not an establishment formed by the Applicant and consequently, it cannot be treated as an establishment of a distinct person. 3. In view of the above and in light of the nature of services which is clearly for the benefit of the Consulting Manager who is not located in India, it can be construed that the Applicant fulfils all the conditions for treating the supply of services as an export of services in terms of Se....
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....er will not registered in India and therefore, their registered place of business will be their registered address (i.e. outside India). c. Condition III - Place of supply of service is outside India From (a) and (b) above, it appears that while the service provider will be situated in India, the service recipient will be located outside India. In order to determine the place of supply, I refer to Section 13 of the IGST Act which provides for the place of supply of services in case where either the service recipient or the service provider is situated outside India. The services to be provided by the Applicant are in the nature of "Support services" classifiable under HSN code 9985. The place of supply in the instant case would therefore be determined as per the general rule i.e. as per Section 13(2) of the IGST Act. The said service of assisting the Indian customer in filling of forms and compilation of required documents, without any representation on behalf of the Consulting Manager, will squarely fall under the classification of business support service. The said subsection provides that the location of the recipient of services shall be the place of supply of services. ....
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....into an agreement with a person located and registered in the United States of America (copy enclosed as Annexure-D to the application for Advance Ruling), referred to as the Consultant Manager who acts for the Regional Centre. In terms of the same, the Applicant will be providing the following two independent buckets of services, as detailed below: NATURE OF SERVICE Marketing Services Handholding Services e. Collecting and analysing information i.e. market analytics, intelligence, preparing and drafting reports, strategy and providing leads to the Consultant Manager; f. Market the EB-5 Program in India to prospective investors g. Address queries of the Consultant Manager as and when required from the Applicant; h. Marketing support services such as arranging premises for the Consultant Manager and prospective investor to meet and negotiate/ discuss at their discretion and without interference of the Applicant; Upon confirmation of a proposed investment from the Consultant Manager and prospective investor, provide hand-holding services like: (i) Assisting in filling of forms (ii) Assistance in remittance 5. It is apposite to note that the consideration for the servi....
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....er the Integrated Goods and Services Tax Act, 2017 ("IGST Act"), reproduced below for ready reference: "(13) "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;" 10. A bare reading of the definition above would show that an intermediary is a person who is a broker/ agent or any other person by whatever name called. In regard to the phraseology 'any other person, by whatever name called" is used in the definition, it is submitted that the same takes colour from the preceding terms, i.e., the legal doctrine of ejusdem generis. Hence, for a supplier of services to be treated as an intermediary basis "any other person, by whatever name called" should be in a similar status as that of an agent or broker. Same understanding was displayed by the Central Board of Indirect Taxes and Customs in Circular No. 83/1/2006-ST dated 04 July 2006 (Annexure "I") while interpreting any other person the context of banking or other financial servi....
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....1/2018 of the Customs, Excise and Service Tax Appellate Tribunal in M/s. Sunrise Immigration Consultants Private Limited vs CCE & ST, Chandigarh in Appeal No. ST/52205/2015 = 2018 (5) TMI 1417 - CESTAT CHANDIGARH (Annexure "2"). In this case, the facts were that the Appellant provided services to foreign universities by way of preparing cases for students was questioned as not being an export but covered within the definition of intermediary under the Finance Act, 1994 which was identical to the intermediary definition under GST. Therein, after a detailed discussion, it was held that the Appellant was not an intermediary but an independent service provider providing services of business support to the foreign universities/ foreign banks for which a commission is paid to the Appellant upon each successful admission. The relevant parts are provided below for ready reference: "2. The facts of the case are that the Appellant is providing various services (A) Visa Facilitation Service and (B) Referral Service .... w.e.f. 01.07.2012, the introduction of the negative list, .... but for the referral services which are in the nature of the services rendered to foreign banks and foreign co....
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.... = 2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS (Annexure "3") wherein in addition to marketing services, the applicant therein was also providing supervision of customer care service and payment processing services to their parent entity, GoDaddy US, a company registered and incorporated in the United States of America. After due consideration, it was held that the applicant therein was not an intermediary under the Finance Act, 1994. The relevant parts are reproduced below for ready reference: "4. Applicant seeks rulings with regard to the following questions of law. Question No. I : Whether, in the facts and circumstances as explained in Annexure I, the various support services proposed to be provided by the applicant to GoDaddy US are a "bundle of Services" being naturally bundled in the ordinary course of business and accordingly is a single service, being 'business support service', in terms of Section 66F of the Finance Act? ... 10. The definition of "intermediary" as envisaged under Rule 20 of POPS does not include a person who provides the main service on his own account. In the present case, applicant is providing main service, i.e., "business support ....
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....ntially identical to the concept of intermediary under the erstwhile service tax regime. This concept has been explained in the Education Guide issued by CBEC in the year 2012 as under: In order to determine whether a person is acting as an intermediary or not, following factors need to be considered: Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary's service is invariably identifiable from 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. Even in other cases, wherever a p....
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....plying the test mentioned in the Education Guide to the facts of the case we can safely conclude that the proposed service would not fall to be classified as 'intermediary service'." (Emphasis supplied) 19. A this juncture, it is submitted that scope and nature of duties of the Applicant is substantially similar to those provided in Asahi Kasei supra including marketing and liaising services (reference is made to the ruling by this Hon'ble Authority on Question No. 2). Basis the same, it is submitted that the decision of Asahi Kasei supra squarely applies and the consequently, the Applicant cannot be termed as an intermediary. Further, the tests relating to an intermediary as extracted supra are not applicable in the present case since the Applicant cannot in any way change or amend or influence the agreement between the Consultant Manager and interested individual. 20. Further to the above, it is submitted that the order dated 26 February 2019 of In Re: Vservglobal Private Limited = 2019 (4) TMI 1543 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA (Annexure "6") by the Hon'ble Appellate Authority for Advance Ruling is inapplicable to the present case sinc....
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....epare cases of students and interested persons for obtaining admission/ investment. 24. For the sake of maintaining brevity, the Applicant reiterates the contentions raised supra. Basis the same, it is submitted that the Applicant is not an agent/ broker or similarly placed person and thereby not covered within the four corners of the definition of intermediary. Further, it is reiterated that the Applicant cannot negotiate, conclude, or in any manner act to influence the discussions between the Consultant Manager and interested individual. Hence, applying the tests Of Asahi Kasei supra, the Applicant in respect of the hand-holding services cannot be termed as an intermediary. Questions (c.) and (d.) 25. Basis the submissions supra, it is submitted that the Applicant is not a provider of intermediary services. On the contrary, and as detailed in the application for advance ruling, the Applicant is a provider of business support services. 26. Consequently, the Place of Provision is the location of the recipient of service, i.e., United States of America. The Applicant will be paid in foreign exchange for the services rendered. Lastly, as the supplier of services (Applicant) is lo....
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.... prospective Investors to participate in such Offering and to also perform the immigration and administrative related duties on behalf of the Company in India; iii. Providing support services viz. arranging premises for the Consultant Manager and prospective investor in India, to facilitate their meeting and negotiation for prospective investment; iv. After, a valid negotiation, the Applicant shall also assist the Consultant Manager in collecting the qualified Investors' personal information and such documentation necessary for his/her investment and also towards completion of the immigration process for such qualified investors. 2. The consideration towards the services provided by the Applicant to the Company, Consultant Manager, shall be received by them by way of payment of a 'Fee' (in USD), towards the advisory services provided by the Applicant upon successful confirmation of a proposed investment by a qualified investor, and a further payment of 'Approval Fee' (in USD), upon receipt of final approval of such investment from authorities. 3. Therefore, from the above, it is evident that the Applicant acts as an intermediary between the Company and....
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....rvices being provided by them to the Company 8. A person can arrange or facilitates supply of goods or services belonging to some other person, only when he/she has been authorised by the principal. In view of this, the test of agency must be satisfied between the principal and the agent i.e, the intermediary. In the instant case, the Applicant is authorised by the Company to act and represent them on their behalf and carry out such functions viz: marketing of the EB-5 program in India to prospective investors and to perform the immigration and administrative related duties on behalf of the Company. Accordingly, the services being provided by the Applicant do not appear to be on Principal to Principal basis, but it appears that the Applicant by way of acting on behalf of the Company for performing the immigration and administrative related functions of the Company towards their prospective investors, is essentially acting as an agent/representative of the company in India. 9. In the case of Global Reach Education Services Pvt. Ltd. [2018 (12) G.S.T.L. 387 (A.A.R. - GST)], = 2018 (4) TMI 808 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL it has been held that "marketing services" pro....
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.... of GST i.e. whether CGST & SGST or IGST is payable on any transaction, it is vital to know the place of supply of goods or services. Taxability of goods or services would be decided on the basis of the place of supply of the said goods or service. 2. The Provision of place of supply of service in case of intermediary are specifically contained under section 13 (8) of Integrated Goods and Service Tax Act, 2017 and the same is summarized hereunder for ready reference Section 13 (8) of the IGST Act states that - - The place of supply of the following services shall be the location of the supplier of services, namely: (a) Services that are supplied by a banking company or a financial institution or a nonbanking financial company to its account holders; (b) Intermediary services; (C) Services that consist of hiring of the means of transport up to a period of one month. Such means of transport includes yachts but excludes aircrafts and vessels. Hence on the basis of above the provisions of section 13 (8)(b), it is pretty clear the place of supply of the intermediary service would be location of the supplier of services, i.e the intermediary. In the instant case, the location....
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....ited States Citizenship and Immigration Services (hereinafter referred to as the "EB-5 Program"). The EB-5 Program envisages that an investor is eligible to a permanent residence permit in the USA subject to an investment of US$ 500,000 leading to job-creation in a commercial entity or investment fund, commonly referred to as a " Regional Centre" or a "Company", approved and recognized by the Government of the United States of America. It has been submitted that a 'Consultant Manager' represents the "Regional Centre" or a "Company" in the USA. The applicant will provide certain services in the nature of marketing and intelligence to the "Consultant Manager" acting for the Regional Centre or Company enabling them to receive investments from prospective investors. The scope of work under this Agreement titled as "Foreign Immigration Advisor Agreement". The details of services to be provided by the applicant is mentioned in his application and includes various services which will enable the applicant to market the EB-5 Program in India to prospective investors in India. Towards this end they will be entering into a Foreign Immigration Advisor Agreement with the Consulta....
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.... surveys to identify the market and prospective investors in relation to the EB-5 program for the Consultant Manager; Prepare reports, marketing plans, market intelligence and compile list of prospective investors for the Consultant Manager; Formulate a strategy plan for the benefit of the Consultant Manager; Address queries of the Consultant Manager in relation to the above, as and when raised by the Consultant Manager; and Conduct sales prospection through necessary participation in industry events and provide spotlight to the EB-5 program Thus we find that in this case, once the Indian investor makes a decision to invest in the US, he contacts the applicant who provides services to the Indian investor and also facilitates meeting/contact between both of them- Indian investor through the applicant contacts the investment consultant in America for advice as to where to invest and the formalities to be fulfilled for the investment under the EB-5 Scheme. For that purpose the Consultant manager appoints an agent or a facilitator who will facilitate such service. The agreement may not call him as an agent but his services are in the nature of a middleman who facilitates meetings betw....
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...." The above definition is examined in detail in the below table Sr. No. Intermediary Definition Explanation 1 means a broker, an agent or any other person, by whatever name called The Applicant is the 'any other person, by whatever name called' 2 who arranges or facilitates the supply goods or services or both, or securities, between two or more persons The Applicant facilitates the investment permanent residence advisory service provided by the Consultant in USA to the Indian investor. Further, applicant will arrange facilitate meetings between investors and the Consultant Manager and once the investors agree to invest, applicant will help them in all respects to complete the formalities in a perfect manner so that the application is not rejected. In a way the applicant arranges and facilitates supply of services between the Consultant Manager and the Indian Investor, For which they receives from the Overseas Consultant Manager. 3 but does not include a person who supply such goods or services or both or security on his own account:" The Applicant does not provide the services on his own account. He will facilitate the provision of services of Investment/pe....
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.... individual, .......... Applicant does not provide any of the services listed in the Section 13(4) The place of supply of services supplied directly in relation to an immovable property, .............. ---do--- 13(5) The place of supply of services supplied by way of admission ---do--- 13(6) (6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, ............... Applicant does not provide such services 13(7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) are supplied in more than one State or Union territory, ............ ---do--- 13(8) (8) The place supply the following services shall be the location of the supplier of services, namely:--- (a) services supplied by a banking company: ...., (b) intermediary services; (c) services consisting of hiring ........ b. Applicant provides intermediary Services 13(9) The place of supply of services of transportation of goods,..... ---do--- 13(10) The place of supply in respect of ........ ---do--- 13(11) The place of supply of services provided on board.......... ---do--- 13....