TaxTMI 
TaxTMI 
2019 (10) TMI 787
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....rovided by the application is taxable under the GST provisions and if yes, what is the SAC and the applicable rate of tax? b) Whether the services provided by the applicant to McAfee Singapore qualifies as export of services under the provisions of the IGST Act considering the fact that: a. The applicant is located in India b. The overseas entity is located in Singapore c. The place of supply is outside India d. The consideration for providing the services is received by the applicant in foreign currency; and e. The applicant and overseas entity are two separate legal entities established under the laws of India and Singapore respectively. c) That the services are not "intermediary" services. 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is a subsidiary of McAfee (Singapore) Pte. Ltd, which is inter alia engaged in the sale of security software products and services. In relation to the business of McAfee (Singapore) Pte Ltd ('McAfee Singapore") the applicant has entered into Marketing Services Agreement to provide marketing support services. b....
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....e such support activities. Such inventory will be maintained in a manner consistent with levels recommended by the Company. Provider will receive samples from Company at no charge. Provider agrees to acquire demonstration equipment from Company according with the then current Standard Sales Order Terms and Conditions of Company (Clause (d)) • The inventory for carrying out these demonstration are kept with the applicant as a custodian Keeping Company advised and informed regarding the above matters in the territory that may of interest or concern to Company in connection with the carrying on of Company's business (Clause (e)) • The applicant informs the overseas entity about the developments in the markets. • Keep McAfee Singapore informed about the market trends, local factors, etc. Providing Company with such reports concerning the above matters as may from time to time be reasonably required by Company (Clause (f)) Otherwise assist Company in serving existing and prospective customers Regarding the manner of compensation, the applicant states that for the marketing support services provided, the applicant is compensa....
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....trategy and operations of an organisation." (iv) The applicant claims that the activities undertaken by the applicant clearly fall under the aforementioned category of service and the same will not qualify as intermediary as these services are provided by the applicant on his own account and the relationship is that of a principal to principal basis as explained below: (b) Services provided by the applicant do not qualify as "intermediary services" as defined under Section 2(13) of the IGST Act, 2017 a. In this regard, the applicant states that Section 2(13) of the IGST Act defines the term "intermediary". Definition provided under the Act is extracted below: "intermediary" means a broker, an agent or any other person, by whatsoever 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" b. The above definition of intermediary talks about three categories: i. Broker or an agent ii. Any person who arranges or facilitates supplies of goods or serv....
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....s 'ejusdem generis' mean 'of the same kind or nature'. 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. (h) The Golden Rule of Interpretation enunciated and espoused by various judicial pronouncements states that the words of a statute must be given their plain grammatical meaning. If the intention of the legislature has to be gathered and deciphered in its proper spirit having due regard to the language uses therein. When the words are unclear or ambiguous, aid of other rules on interpretations must be used. a. The statute enumerates the specific words; b. The subjects of enumeration constitute a class or category c. That class or category is not exhausted by the enumeration; d. The general terms following the enumeration; and e. There is no indication of a different legislative intent. (i) The applicant has cited the judgement of the Punjab and Haryana High Court in the case of CIT v. Rani Tara Devi = 2013 (3) TMI 53 - PUNJAB & HARYANA HIGH COURT he....
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....tion needs to be cumulatively fulfilled i.e., it should entail "arrangement" or "facilitation" of a 'main supply of goods or services' between the service recipient, i.e. the overseas entity and its customers in India. In other words, an 'intermediary' is expected to play an active role in arranging or facilitating the actual provision of service or supply of goods between the real service provider and real service recipient. Hence, there should be an interaction or facilitation with the feature of supply of the (main) service and the 'intermediary' should have a role in the main supply of goods or services being rendered by the service recipient to its customer in India. c. The applicant states that as per the definition of 'intermediary service', the words that have been used in the definition are (a) arranges and (b) facilitates. It would be pertinent to understand the meaning of these words: Facilitate (verb) : Oxford English Dictionary - 'to make an action or process easy or easier". Arrange (verb) - Oxford English Dictionary - 'organise or make plans for (a future event)' From the above definitions, the applicant claims that it is clear that the "inter....
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....cation above fully recognises an arrangement between a service provider and a service recipient, where customers of the service recipient are dealt with by the service provider, shall not qualify to be an "intermediary". This principle well covers all subcontracting arrangements. Hence the applicant submitted that the marketing supporting services provided by the applicant are on its own account. The applicant also submits that the relationship between the parties are that of independent contractors and not as principal-agent. 4.3 The applicant states that he receives consideration on cost plus basis and does not receive any commission amount as in the case of "intermediary" as brokerage and further they do not negotiate on behalf of the service recipients. He states that they do not have any express or implied authority to negotiate any agreement on behalf of the service recipients. The applicant states that the payment received is independent of the quantum of sales made by McAfee Singapore and the yardstick for payment is based on the costs incurred on periodic basis. 4.4 The applicant further states that he does not conclude the sale but merely facilitate technic....
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....licant to McAfee Singapore are independent of the transaction between McAfee Singapore and the customers 4. Power of negotiation on behalf of principal Yes Not fulfilled - McAfee Singapore can only communicate the terms to customers 5. Arrangement or facilitation of supply of goods Yes Not fulfilled - as explained above in the facts that the applicant's role is limited to • Identification of customers, • Initial information gathering of prospective customers • Ensuring compliance with McAfee Singapore supplier standards • Undertake demonstration of the products Separation of Value 6. Value of service is invariably identifiable from the main supply Yes No - Value is not linked with the sale by McAfee Singapore to the customers (service cost charged by the applicant is calculated on the basis of costs and expenses incurred wholly and properly attributed to the provision of services and paid independent of whether any sale is undertaken or not) 7. Consideration is generally an agreed percentage of the sale or purchase price which is called commission Yes Not applicable - ....
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....e agreement is on principal to principal basis and not as agent. e. The decision of CESTAT, Chandigarh in the case of Sunrise Immigration Consultants Private Limited v. CCE & ST, Chandigarh [2018 -VIL - 539-VESTAT-CHD-ST] = 2018 (5) TMI 1417 - CESTAT CHANDIGARH wherein it was held that activity undertaken by the applicant was in the nature of business auxiliary service and will not be covered under the definition of intermediary as business auxiliary services are not the main service provided by the main service providers namely banks and universities. 6. Regarding the place of supply of the marketing activities undertaken by the applicant, the applicant claims that the same is outside India and argues the same stating that McAfee Singapore is the recipient of Services and the location of McAfee Singapore is Singapore, which is a place of supply of services provided by the applicant. 7. Based on the above, the applicant argues that the services provided by him to McAfee Singapore qualifies as Export of Services under the provisions of the IGST Act as it qualifies all the conditions laid down to treat a transaction as export of services under section 2(6) of the IGST ....
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....on the jurisdiction of the High Court and Supreme Court on entertaining statutory appeals from the Tribunal. As per the Sections referred above, if the question of law related to the determination of rate of duty, then the appeals from the Tribunal were before the Supreme Court under Section 35L of the Central Excise Act, 1944. 8.1 The applicant also relies on the decision of this Authority in the case of Gogte Infrastructure Development Corporation Limited, wherein has examined the place of supply in the case of accommodation services. The question before the Authority was whether the hotel accommodation and restaurant services provided within the premises of the hotel to the employees and guests of SEZ units should be treated as supply to SEZ Units. 8.2 The applicant states that the Hon'ble High Court of Karnataka in its judgement in the case of CST v. Scott-wilson Kirkpatrick [2011 (23) STR 321 (Kar)] = 2011 (4) TMI 500 - KARNATAKA HIGH COURT had interpreted the phrase 'determination of rate of duty' and relying on the decision of the Supreme Court in the case of Navin Chemicals [1993 (68) ELT 3 (SC)] = 1993 (9) TMI 107 - SUPREME COURT had held that the jurisdiction of the....
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....tion for advance ruling as well as the arguments put forth by made by Sri. Harish Bindumadhavan, Advocate during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST 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 provisions under the KGST Act. 10.1 The transaction of the applicant is verified and found that the applicant supplier of service and the recipient of service are group companies and the applicant has not provided any shareholding pattern of the recipient of service. 10.2 On careful perusal of the application and the adjunct documentary evidences and also the submissions of the applicant and his representative, the following issues emerge: (a) whether the applicant is acting as an intermediary of McAfee Singapore? (b) Whether the services supplied by the applicant to McAfee Singapore is marketing services or intermediary services ....
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....ition of "intermediary". What is important in this definition is the question whether the service provided by the service provider amounts to arranging or facilitating the supply of goods or services and not the nature of the service provider and service recipient. 10.6 The reliance placed by the assessee on the judgements based on ejusdem generis is not applicable in the present case as the judgements are related to "other names" and not "other persons". When the term "other" is related to the other names given for a class of persons, then the principle of ejusdem generis is applicable. But in the definition, it is clear that the word "other" is used as an adjective to the person and hence it is commonly understood to exclude the other persons who are preceding it and hence the argument of the applicant cannot be accepted. 10.7 The arguments of the applicant have been analysed and it is found that the support he has taken on the various decisions of the advance ruling authorities of the erstwhile service tax regime are all related to the service tax era and has no applicability during the GST regime. Hence the same needs to be verified in light of the GST Act. 10.8 The ar....
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....pany and customers and other pre-sale and after-sale customer liaison activities. Investigating customer inquiries received by Company and referred to Company; (c) Advising and assisting in complying with the laws, regulations, business and financial practices in effect in the Territory, including providing assistance in obtaining necessary local licences, permits and authorisations; (d) Assisting Company in the demonstration of the Products. Provider agrees that a minimum level of samples and demonstration equipment may be required in order to provide such support activities. Such inventory will be maintained in a manner consistent with levels recommended by Company. Provider will receive samples from Company at no charge. Provider also agrees to acquire demonstration equipment from Company according in accordance with the then current Standard Sales Order Terms and Conditions; (e) Keeping Company advised and informed regarding the above matters in the territory that may be of interest or concern to Company in connection with the carrying on of Company's business; (f) Providing Company with such reports concerning the above matters as may from t....
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....ttorney-in-fact, employee or representative of Company. Nothing contained herein shall be construed as constituting or creating a joint venture, partnership or other relationship between the Parties. . . ." 11.5 Exhibit A annexed to the above agreement reads as under: "Marketing Support Services: Provider shall perform services to support and facilitate the selling, marketing and distribution of Products by Company and its affiliates. Typical functions in this area include but are not limited to the activities listed below: (a) Identifying potential business and contacts for the sale of the Products by Company to prospective and existing customers in the Territory; (b) Liaising with current and prospective customers of Products in the Territory by facilitating technical communication between the Company and customers and other pre-sale and after-sale customer liaison activities. Investigating customer inquiries received by Company and referred to Company; (c) Advising and assisting in complying with the laws, regulations, business and financial practices in effect in the Territory, including providing assistance in obtaining necessary....
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....des business brokerage and appraisal services other than for real estate; business services of intermediaries and brokers; specialist advice other than for real estate, insurance and engineering (specialist services in art, specialist services for courts of law, etc.); services by agencies and agents on behalf of individuals seeking engagements in motion pictures, theatrical productions, modelling or other entertainment or sports attractions; placement of books, plays, artwork, photographs, etc., with publishers, producers, etc.; issue of reduced-price coupons and gift stamps; management services for copyrights and their revenues (except from films); management services for rights to industrial property (patents, licences, trademarks, franchises, etc.); auctioning services other than in connection with legal procedures; reading of electric, gas and water meters; data preparation services; specialized stenotype services such as court reporting; public stenography services; other business support services not elsewhere classified This service code does not include: - • maintenance of electricity, gas and water meters, cf. 996911, 996912, 996921 • se....