TaxTMI 
TaxTMI 
2019 (7) TMI 1476
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance Ruling No. GST-ARA-35/2018-19/B-108 dated 05.09.2018 = 2019 (1) TMI 1091 - AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA BRIEF FACTS OF THE CASE A. M/s. Asahi Kasei India Pvt. Ltd., The Capital Office No. 1502-B, 15th Floor, Plot No. C-70, G-Block, Bandra Kurla Complex, Bandra(East),Mumbai 400051 (here in after referred to as 'the Respondent') filed detailed application under Section 97 of the Central Goods and Service Tax Act, 2017 read with Rule 104 (1) of the CGST Rules, 2017 before the Maharashtra Authority on advance ruling seeking advance ruling on: 1) Whether the service supplied by the Respondent under the Service Agreement dated 1 March 2013 constitute a supply of "Support Services" falling under HSN code 9985 or "Intermediary service" classifiable under HSN code 9961/9962? 2) Whether the service supplied by the Respondent under the Marketing Services Agreement dated 1 December 2012 constitute a supply of "Support services" falling under HSN code 9985 or "Intermediary service" classifiable under HSN code 9961/9962? 3) Whether the service provided by the Respondent is an export of services as defined under Section 2(6) of the Integrated Goods and Service Tax Act 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st+prorated overhead expenses+10% mark-up+applicable taxes. E. It was seen that the Respondent is engaged in the activities for the party A, such as corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, provide with economic, industrial and technical information on the products falling under the category of the Products and their markets, trends and outlook together with similar information concerning such other industries in the Territory and shall make market surveys of the Products in the Territory and report the results thereof etc to Party A. F. In view of the above, it was submitted that the marketing services, advertisement and promotion services, customer relationship management, evaluation of prospective customers etc would qualify to be in the nature of business support services. G. Therefore, since the services provided by the Respondent to Asahi Group were similar, the supply of services provided by the Respondent to the Asahi Group appear to be covered under "Business Support Service" classifiable under HSN CODE 9985. Statement of facts having bea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y other assistance in the context of the above, regarding service recipient's marketing activities that may be reasonably requested by service recipient after the effective date in writing to AKI." I. In view of the above, it could be said that the marketing services, advertisement and promotion services, customer relationship management, evaluation of prospective customers etc would qualify to be in the nature of business support services. J. Therefore, since the services provided by the Respondent to Asahi Group are similar, the supply of services provided by the Respondent to the Asahi Group appear to be covered under "Business Support Service" classifiable under HSN CODE 9985. Statements of facts having bearing on the question (3) : K. The Term "export of services" as defined under Section 2(6) 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 covetable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n that State or Union territory, then such establishments shall be treated as establishments of distinct persons. In the instant case, the service recipient i.e. Asahi group is not an establishment formed by the Respondent and consequently, it cannot be treated as an establishment of distinct person. In view of the above, it could be construed that the Respondent fulfils all the conditions for treating the supply of services as an export of services in terms of Section (6) of IGST Act except for the fact that in order for a service to qualify as export of service one condition amongst the others is that 'the place of supply of service is outside India'. In the case of the Respondent it was seen that the Service is provided in India and therefore the service provided by the Respondent cannot be said to be export of service. M. The Advance Ruling Authority vide Order No.GST-ARA-35/2018-19/B-108 dated 05.09.2018 = 2019 (1) TMI 1091 - AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA received by this office on 23.01.2019 held as under: Question-1 A. The services provided by the respondent in the nature of Research on the matter related to functioning of the holding of company such as - co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to said para 8 that Advance Ruling cannot be given without proper and full facts. In this Para, conditions like 'but not limited to' is mentioned, which does not give a clear picture of what services it pertains to. 2.2 In view of above, it may be seen that advance ruling requires complete and total information. However, the same were not provided and the advance ruling has been given on the basis of incomplete information. 3. With regard to Question No. 2 the provisions of section 182 of the Indian Contract Act, 1872 are relevant. As per Section 182 of the Indian Contract Act, 1872 tan agent is a person employed to do any act for another, or to represent another in dealing with the 3 rd person, the person for whom such act is done, or who is to be represented is called a principal'. 3.1. In view of the above, agent wears two hats. On close examination of the act of an agent, it will transpire that it is not the contract between the agent and principal which decides the question as to whether the person is an agent or not. Actually, it is the involvement of 3rd person which decides the question if a person is an agent or not. The Advance Ruling authority decided the question of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rting the same to the service recipient; and j) Any other assistance in the context of the above, regarding service recipient's marketing activities that may be reasonably requested by service recipient after the effective date in writing to AKI. " It may however be noted that the scope of service for the marketing services agreement with APNA do not include the points (c), (g) and (i) as mentioned above. 3.2. Out of above list of services, it may be seen for instance that services of Connecting customers with representatives of the service recipient' may be provided both with and without involvement of a 3rd person. The applicant's activities related to said services indicate the applicant may be performing the said activity for M/s. Asahi Kasei. If that is the case, the applicant can be held to be a principal only if they first purchase the subject goods on their own account and then supply it to various clients. However, if the applicant sells the goods relating to M/s. Asahi Kasei, they cannot be held to be a principal due to presence of 3rd person. In that case, the applicant would be acting as an intermediary / agent who bring M/s. Asahi Kasei and prospective customers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by them after the introduction of the GST regime. Respondent's Submissions: 8. The respondents have submitted that prior to GST, they used to claim a refund of service tax vide Rule 5 of the CENVAT Credit Rules, 2004 and such claims were sanctioned from time to time after due examination by the jurisdictional service tax authorities after due scrutiny of the facts. 9. Independent of the above, it is also submitted that the in the appeal memorandum to the effect that usage of the phrase "but not limited to" does not give a clear picture of what it pertains to is ex-facie incorrect on facts. Clause 8 of the Services Agreement entered into by the Respondent actually contains the phrase "Party B shall perform services, as directed by Party A, resulting from the assignments pursuant to Paragraph 4 through 7 of this Agreement, including, but not limited to, those services with regard to finance, accounting, and patent and legal matters. "Hence, the scope of services is specified, clear, distinct and not vague as claimed by the Appellant. 10. It is submitted that the definition of 'intermediary' under the erstwhile Finance Act, 1994 as also under the IGST Act has remained identical. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dered by banks or financial institutions. 15. "4. Hence, banking and other financial services provided by a banking company or a financial institution or a non-banking financial company or any other service provider similar to a bank or a financial institution are liable to service tax under section 65(105)(zm) of the Finance Act, 1994. Department of Posts is not similar to a bank or a financial institution and hence does not fall within the category of any other similar service provider. 16. As explained supra, the Respondent does not in any manner arrange or facilitate the supply of goods. The very consideration payable by the Respondent itself shows that there is no intrinsic interest in consummating a transaction. On the contrary, the Respondent merely provides services as and when requested by the associate entity without there actually being an underlying sale/ supply or the like. Hence, in these terms, it is submitted that the Respondent cannot be termed as an intermediary. Reliance is placed on the following judgments/rulings: * Commissioner of Central Excise and Service Tax, Bangalore - V vs. Analog Devices India Pvt. Ltd. = 2017 (12) TMI 830 - CESTAT BANGALORE * Ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inst Sr. No. 17 that the party has declared that NO proceeding is pending in any case under any provision of the Act against the applicant whereas applicant himself attached the letter issued from DGGI, MZU, Mumbai dated 23.01.2018 as Annexure-K to the said application. It is clear from above letter that there is a pending proceeding against the applicant in DGGI, Mumbai Zonal Unit under the provisions of the subject CGST Act and hence the above said application is contrary to the provisions of the CGST Act, 2017 and does not hold good. 17.2 Further, the Appellant has quoted the text of section 97(2) of CGST Act is reproduced below: "(2) The question on which the advance ruling is sought under this Act, shall be in respect of, - (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 tax credit of tax 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the argument put forth by the jurisdictional officer and are satisfied to the extent that the appellant was prevented by sufficient cause from presenting the appeal within period of thirty days from the receipt of the said ruling of AAR, and accordingly allow the appellant to present the appeal within a further period of 30 days in terms of proviso to sub section 2 of section 100 of the CGST Act 2017. 21. We have gone through the entire records, facts of the case, and have also considered the written as well as oral submissions made by the appellant as well as by the respondent. We have also gone through the impugned order, issued by the Advance Ruling Authority, which rules that the activities performed by the Respondent i.e. Asahi Kasei India Pvt. Ltd. as detailed in the Service Agreement entered with Asahi Japan [dated 01 March 2013] as amended on 05 January 2017 and another Marketing Service Agreement entered with Bioprocess Division of Asahi Kasei Medical Co. Ltd. ("AM") [dated 01 December 2012] will be covered under the Business Support Services having SAC 9985 and Marketing Services having SAC 9983 respectively, and accordingly has held that the service provided by the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or from the Respondent. Thus, from the said Annexure K, it is revealed that the enquiry was restricted to the service tax matter only as the period of the enquiry was before the introduction of the GST regime, and hence does not include any issue pertaining to the GST, whatsoever. 24. Now, coming to the legal provisions relating to the maintainability of the Advance Ruling application, which have been laid out in Section 98(2) of the CGST Act, 2017 reproduced herein above in para 22, it is expressly clear that only those application will not be admitted before the Advance Ruling Authority, wherein the questions raised in the application are already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. Since there is no issue pertaining to the GST Act which is pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act, the Advance Ruling application filed by the Respondent before the Advance Ruling Authority is clearly maintainable. 25. Thus, we conclude that the additional submissions filed by the Appellant i.e. the Jurisdictional Officer is not sustainable and therefore we do not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Respondent could have been performed separately and independently with each other, the fact that the Respondent is raising a singly consolidated invoice in accordance with Clause 9 of the Service Agreement dated 01.03.2013 as amended on 05 January 2017 makes these supplies stipulated under this Agreement as mixed supply in terms of the provision of Section 2(74) of the CGST Act, 2017, which is reproduced herein under: (74) "mixed supply" means two or more individual supplies or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute composite supply." Thus, from the above discussion, it may verily be inferred that the services performed by the Respondent in terms of the above Service Agreement dated 01.03.2013 as amended on 05.01.2017 is the mixed supply. 29. Now, coming to the supply elements ingrained in the Agreement dated 01.03.2013 entered between the Respondent and its parent company, it is observed that the Respondent is obliged to perform services which are enumerated herein under: a) Conducting market surveys and providing the service recipient with the information on In....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Respondent for its parent company, it is revealed that the Respondent is performing a spectrum of services, of which the following services can be classified under the service Heading "Research and Development services" having SAC 9981 i) Conducting market surveys and providing the service recipient with the information on Indian market trends and features so as to assist in determining the nature and scope of the Indian market potential; 31. The following services, performed by the Respondent, will be covered under the Heading "Other professional, technical and business services" bearing SAC 9983: i) Assisting the service recipient in the adaptation and implementation of its advertising policy, ii) Assisting the service recipient in conducting sales prospection through participation in industry events such as scientific gatherings, exhibitions, trade shows and the like; iii) Providing any feedback to the service recipient that would help improve the service recipient's marketing; Facilitating the service recipient in arrangement of discussions and provision of interpretation services and cross culture advice; for the sake of clarity, neither AKI (i.e. the Respondent) no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t' or 'any other person by whatever name called, who arranges or facilitates the supply of goods or services or both or securities'. ii. The supply arranged or facilitated must be between two or more persons. iii. He should not be the person who supplies the goods or services or securities on his own account. 35. Now, from the services specified above, it is expressly evident that the Respondent is arranging or facilitating the business of its parent company i.e. Asahi Kasei Japan by liaising with the customers, prospective customers of its parent company i.e. Asahi Kasei Japan by way of collecting their product development plans and strategy and "road-maps", as well as their product specifications, and reporting these information to its parent company, by connecting Customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commercial relationships between service recipient and customers, and by providing information on products and its functioning or similar such services to service recipient's customers and notifying service recipient of any consumer complaints. Thus, it can conclusively be deduced that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds which are supplied to the customer of its parent company belong to its parent company, and not to the Respondent. 39. Thus, all the essential ingredients of the intermediary have been fulfilled by the Respondent. 40. Now, as regards the issue as to whether the entire gamut of services provided by the Respondent as a package comprising the services envisaged under the Marketing Services Agreement dated 01.12,2012, against a lump sum amount can be considered as composite supply, or mixed supply, it is seen that the Services, which have been sub-categorised under the Heading "Research and Development services" having SAC 9981, under the Heading " Other professional, technical and business services" bearing SAC 9983, and under the Heading "other miscellaneous services" bearing SAC 9997, can be supplied separately and independently, as there is no intrinsic relationship between these services, thus rendering the entire gamut of supply as mixed supply and not the composite supply as these services are not naturally bundled. 41. As regards the question (3) of the application filed before the Advance Ruling Authority, wherein it was asked from the Advance Ruling Authority as to wheth....