AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 1476
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....tment" interchangeably) against the Advance 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, 15^th 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 ....
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....." D. As per Clause 9 of the Agreement, Service consideration received by the Respondent is the direct cost+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 appe....
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....itoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting 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." 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 Indi....
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....- (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. 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 Ad....
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....llows "Assisting AM in the adaptation and implementation of AM's advertising policy appears to fall under "Advertising services under heading no. 998361 and will be covered under section 13(2) of the IGST Act, 2017 and place of supply of service or shall be the location of the recipient of services;" However, in the comments dtd. 17.07.2018 it was submitted by the department with regard 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....
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....mises of the service recipient and the same shall not be made available to employees or other personnel of service recipient who may visit India; h) Providing information on products and its functioning or similar such services to service recipient's customers and notifying service recipient of any consumer complaints; i) Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting 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 3^rd person. The applicant's activities related to said services indicate the applicant....
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....in order to ascertain the true nature of the activities of the applicant. 6. However, the Advance Ruling Authority failed to appreciate the vital importance of the said key information about the end to end transactions of the applicant. 7. The Appellant, inter-alia, have also prayed, vide the Misc. Application filed for the condonation of the delay in filing the appeal, that the delay in the filing of the appeal may be condoned, which they have attributed to the initial teething problem being faced 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 ....
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....(12). Such services provided to a customer by a banking company or a financial institution including a non-banking financial company or any oilier body corporate or any other person to a customer are liable to service tax under section 65 (105) (zm). The expression 'any other person' appearing in section 65(105)(zm) is to be read ejusdem generis with the preceding words. The expression 'other financial 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. 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 th....
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....nity o/ hearing has been given to the applicant: Provided also that where the application is rejected, the reasons for such rejection shall be specified in the order." Thus, Section 98(2) of the CGST Act, 2017 talks about admission or rejection of the applications received for advance ruling provided that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in case of an applicant under any of the provisions of CGST Act. On scrutiny of the subject Advance ruling application dated 30.05.2018 in form CGST ARA-01, it is found against 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 Appel....
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....t, and by Shri Dinesh Kumar Aggarwal as representative of the Respondent. During the course of the personal hearing, the representatives of both the sides reiterated their written submissions and made averments in their defense. Discussions and findings 20. At the outset of proceedings, we observe that there is a delay of 28 days in filing the said appeal by the appellant and the appellant has, accordingly, filed an application for condonation of the delay which they have attributed to the initial teething problem after the introduction of the GST regime. The above ground for delay in filing the appeal, put forth by the Appellant, was not opposed by the respondent. We also find merit 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 t....
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....he Advance Ruling application filed by the Respondent before the Advance Ruling Authority in light of the Annexure K to the Advance Ruling application, the said Annexure K, which is a letter issued by DGGI, MZU, pertaining to the Service Tax enquiry against the Respondent for the period ranging from 01.04.2013 to 30.06.2017, is perused, On perusal of the said enquiry letter dated 23.01.2018, it is observed that the said Service Tax enquiry was initiated to ascertain the facts relating to the payment of service tax, wherein various financial documents and statements including the Income/expenditure ledger, Cenvat Credit ledger, Audited Annual Financial Reports for the period from 01.04.2013 to 30.06.2017 were called for 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 ....
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....rmation concerning such other industries in the Territory, and making market surveys of the Products in the Territory and reporting the results thereof etc to its parent company. Looking into the above activities performed by the Respondent, it is observed that the Respondent is undertaking a gamut of activities which are in the nature of accounting services having SAC 9982 and other professional, technical and business services having the SAC 9983, which are specified under Section 8 of the Chapter 99 having description Business and Production services in the scheme of the classification of the services given in Annexure to the Notification No. 11/2017 -C.T. (Rate), dated 28.06.2017. Since all these activities undertaken by the 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 ....
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.... AKI will not be the premises of the service recipient and the same shall not be made available to employees or other personnel of service recipient who may visit India; h) Providing information on products and its functioning or similar such services to service recipient's customers and notifying service recipient of any consumer complaints; i) Monitoring regulatory developments (including, where possible, establishing and maintaining contact with regulatory agencies) and reporting 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." 30. Thus, from the above list of services, performed by the 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 ass....
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....btaining orders and establishing and maintaining close commercial relationships between service recipient and customers; iii) Providing information on products and its functioning or similar such services to service recipient's customers and notifying service recipient of any consumer complaints; 33. To put the matter in perspective, the definition of the "intermediary" is reproduced herein under: "(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; 34. Hence, a person is covered under the aforesaid definition of 'intermediary" if following three conditions are satisfied: i. He must be a 'broker' or an 'agent' 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 servic....
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.... representatives of the service recipient for the purpose of obtaining orders, and establishing and maintaining close commercial relationships between service recipient i.e. its parent company and its customers. 36. Thus, we hold that the first criterion of the intermediary i.e. He must be a 'broker' or an 'agent' or 'any other person by whatever name called, who arranges or facilitates the supply of goods or services or both or securities', as specified under para 30 has been aptly fulfilled. 37. Now coming to the second criterion i.e., The supply arranged or facilitated must be between two or more persons, is also fulfilled as this facilitation services performed by the Respondent is between the two persons i.e. its parent company and its customer. 38. Now coming to the third criterion i.e., He should not be the person who supplies the goods or services or securities on his own account, is also fulfilled as the goods 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 whe....