TaxTMI 
TaxTMI 
2019 (11) TMI 476
X X X X Extracts X X X X
X X X X Extracts X X X X
....No. GST-ARA-30/2018-19/B-92 dated 20.08.2018 = 2018 (12) TMI 650 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA. BRIEF FACTS OF THE CASE A. Segoma Imagining Technologies India Pvt Ltd (hereinafter referred as Segoma India) is Indian private limited company set up under the Indian Companies Act. B. Segoma India is 100% Subsidiary of Segoma Ltd (hereinafter referred as Segoma Israel) which is based in Israel. C. Segoma Israel is subsidiary of R2Net which is based in US. D. R2Net has agreement with customers for listing Diamonds online on website www.jamesallen.com. E. As per agreement between R2Net and customers of R2Net, R2NET lists on the system only those diamonds that are photographed with R2Net's proprietary Diamond Display Technology. Customer agrees to send its diamonds and/or gemstones to be photographed in R2Net's photography centers on a regular basis. F. R2Net has appointed Segoma Israel for photography service. Inturn, Segoma Israel has made agreement with Segoma India to do photography service. G. Segoma Imaging Technologies has developed a method of providing potential buyer(s) with what could be simplified as a '3D model' of the valuable stones & j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal to Honourable Appellate Authority for advance ruling' (AAAR) against the non-applicability of condition no: iii) and v) of section 2(6) "Export of services" of the IGST Act as per the grounds of appeal mentioned hereunder: 3. This, being a performance-based service falling u/s 13 (3) The place of supply of the following services shall be the location where the services are actually performed, namely: - Services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services;.... Since the goods are physically made available by the Diamond dealers / Traders who are not recipient of service, it does not satisfy condition as mentioned in Sec 13 (3) (a), further the export condition no: (ii) Segoma Israel is recipient of service, has been accepted by the learned AAR. 4. Definition of Recipient of Service as per Sec 2 (93) of CGST: (93) "recipient of supply of goods or services or both means - (a) Where a consideration is payable for the supply of goods or services or both, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sec 13 3 (a) and relied upon the Rules of Interpretation, to defend our stand we hereby elaborate the said Rules of Interpretation: Section 13(3)(a) of the IGST Act: "(3) The place of supply of the following services shall be the location where the services are actually performed, namely:- (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs;" .............................. 12. In the above context, The Learned Authority has stated that rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or court to take upon itself the task of amending or altering the statutory provisions." (para 8)" 17. The purpose of Interpretation of Statutes is to help the Judge to ascertain the intention of the Legislature - not to control that intention or to confine it within the limits, which the Judge may deem reasonable or expedient. 18. Some Important points to remember in the context of interpreting Statutes: • Statute must be read as a whole in Context • Statute should be Construed so as to make it Effective and Workable - if statutory provision is ambiguous and capable of various constructions, then that construction must be adopted which will give meaning and effect to the other provisions of the enactment rather than that which will give none. • The process of construction combines both the literal and purposive approaches. The purposive construction rule highlights that you should shift from literal construction when it leads to absurdity. 19. In construing Statutes, the cardinal rule is to construe its provisions Literally and grammatically giving the words their ordinary and natural meaning. This rule is also known as the Plain mea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....services or both means - (a) Where a consideration is payable for the supply of goods or services or both, the person who is liable to pay the consideration; (b) ................ (c) ................" Since according to the plain meaning rule, and an absent contrary definition within the statute, words must be given their plain, ordinary and literal meaning. If the words are clear, they must be applied, even though the intention of the legislator may have been different, or the result is harsh or undesirable. The literal rule is what the law says instead of what the law means. "Some laws are meant for all citizens (e.g., criminal statutes) and some are meant only for specialists (e.g., some sections of the tax code). A text that means one thing in a legal context might mean something else if it were in a technical manual or a novel. So, the plain meaning of a legal text is something like the meaning that would be understood by competent speakers of the natural language in which the text was written who are within the intended readership of the text and who understand that the text is a legal text of a certain type." (Prof. Larry Solum's Legal Theory....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the legislative intent is not clear." 24. Moreover, it is been regularly held by Hon'ble Supreme Court of India that one of the basic principles of interpretation of Statutes is to construe the words according to their plain, literal and grammatical meaning. If this principle is contrary to, or inconsistent with, any express intention or declared purpose of the Statute, or if it would involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no further. The onus of showing that the words do not mean what they say lies heavily on the party who alleges it. [41] 25. For determination of the meaning of any word or phrase in a statute, the first question is what is the natural and ordinary meaning of that word or phrase in its context in the statute but when that natural or ordinary meaning indicates such result which cannot be opposed to have been the intention of the legislature, then to look for other meaning of the word or phrase which may then convey the true intention of the legislature. In the case of 'Suthendran V. Immigration Appeal Tribunal, the question related to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no further. The onus of showing that the words do not mean what they tell lies heavily on the party who alleges it. [41] The departure from this rule is allowed in few cases and in those cases where following rules supplement the literal rule of interpretation. This departure has beautifully been stated by the court in the following words: When the astuteness of the legislature results in manifest ludicrousness or discrimination, the courts have wide powers to substitute their own astuteness. Understanding words, phrases and sentences of a statute in their ordinary and natural meanings. In simple words, read the law as it is written without adding or deleting any words written in Law. This rule will not be applicable in following circumstances: i. If Language is Ambiguous i.e. two interpretations is possible. ii. If the literal interpretation defeats the actual intention of legislation. In view of the above discussions, we would like to state that there have been additions or substitution ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned Authority is of the opinion that Segoma is carrying on business in Indian territory as a representational office of Segoma Israel. Analysis Definition: A representative office is an office established by a company or a legal entity to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted. 33. First, Segoma India acts on principal to principal basis and has its own business set up in India. Segoma India does not provide any marketing services for Segoma Israel. Segoma India carries transactions independently. On careful review of the above explanation 1 Segoma India having its separate PAN no and Corporate registration No. hence Segoma India cannot be considered a Branch office or representational office of Segoma Israel as the transactions are made Principal to Principal, and it is this transaction between Segoma India and Segoma Israel that is claimed as a Zero rated export supply and a transaction between distinct persons as per the IGST Act. Case laws: 34. Tandus Flooring India Pvt Ltd. Ruling No. AAR/ ST/ 03/2013 dated 26-8-2013. 2014 (33) S.T.R. 33 (A.A.R.) = 2013 (8) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... these entities may be subsidiaries of Microsoft Corporation USA, as they are distinct legal entities and therefore appellant and MGSCI are separate legal entities. The impugned order proceeds on the basis that while a holding company may have effective control over a subsidiary, such control does not amount to ownership of the holding company over the subsidiaries, which is the condition for sharing of assets". 36. Notwithstanding anything mentioned above the Sec 97(2) of CGST MGST Act 2017, Refers to the question on which the advance ruling is sought under this Act, (a) Classification of any goods or services or both under the Act; (b) Applicability of a notification issued under the provisions of the Act; (c) Determination of time and value of the goods or service 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 the applicant is required to be registered under GST; (g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le to the supplier of the service for the performance of the said service, the place of the supply of service will be the location where the service is actually performed. Since the goods are made available to the supplier of the service in the state of Maharashtra, the place of supply in the present case will be Maharashtra. Further, since the location of the supplier of the service is in Maharashtra and the place of the supply of the service is also in Maharashtra, it was held by the AAR that the said supply of the Appellant will be treated as an Intra - State supply in accordance with the provision of Section 8(2) of the IGST Act, 2017, which states as under: "Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same state or same Union Territory shall be treated as intra-State Supply:" 40. In view of the findings, the AAR, while answering the second question asked by the Appellant, wherein the Appellant had asked whether the supply made by them will be a zero rated supply i.e. export within the meaning of Section 2(23) read with Section 2 (6) of the IGST Act, 2017, held that the....