TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 516
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....02, "Komalraj", 2nd Cross, H.D.Kote Road, Srirampura, 3rd Stage, Mysuru - 570 023 (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 64/2019 dated 20th Sept 2019 = 2019 (10) TMI 788 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant is an individual stated to be an employee of an overseas company engaged in business of manufacturing and selling various categories of distribution transformer components and accessories. The Appellant states that he is employed as the Regional Sales Manager for the Middle East and Indian markets by H-J Family of Companies having its office in the United States. 4. The Appellant is required to make a presentation of the various categories of distribution transformer components and accessories offered by the company. The company specifies the presentation and the technical details of the products. The Appellant reports to a Sales Manager based in the office of the Company in Europe. The Appellant is required to report the status of the sales development (with customers in the Middle East and Indian Markets) to the Sales Manager based in the European Office on a weekly basis. T....
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....d by the ruling given and has filed this appeal on the following grounds. 8.1. The Advance Ruling Authority has erred in the finding that the appellant is an intermediary and not an employee within the meaning of the CGST Act; that the Authority has erred in the appreciation of evidence (including the Appellant's Income Tax returns and the marketing brochure of H-J Family of Companies) in determining the nature of services performed by the Appellant under the GST law and has erred in the application of the established principles of law in the classification of income under an indirect tax legislation. PERSONAL HEARING: 9. The Appellants were called for a personal hearing on 31st January 2020 and were represented by Ms. Roopashi Khatri, Advocate who submitted that the challenge in the appeal was only with respect to the lower Authority's decision regarding classification of the service as an intermediary, under Heading 9983; that it is the claim of the Appellant that the service is one of market research done by an independent sales manager for a US company; that the foreign company has no permanent establishment in India and the Appellant is merely rendering a market resea....
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....or, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" of excisable goods. Explanation - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "Commission Agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale....
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....t their contracts." In the judgment under appeal the High Court repelled the stand of the appellant relying upon the decision of a Full Bench of the Madras High Court in Kandula Radhakrishna Rao & ors. v. The Province of Madras represented by the Collector of West Godavari, Eluru & anr. MANU/TN/0271/1952 : AIR 1952 Mad 718 = 1951 (11) TMI 10 - MADRAS HIGH COURT Referring to the identical definition of the dealer in the Madras act Rajamannar, C.J. delivering the judgment on behalf of the Bench has stated at page 723, column 2 : "In the case of a commission agent, the accepted mercantile practice is that he has control over or possession of the good and he has the authority from the owner of the goods to pass the property in and title to the goods. If this is so, undoubtedly when a commission agent sells goods belonging to his principal with his authority and consent and without disclosing to the buyer the name of the owner, there is certainly a transfer of property in the goods from the commission agent to the buyer. A business which consists in such transactions can properly be described as a business of selling goods. A similar position would arise even in the case of a commi....
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....lace of supply of services where location of supplier or location of recipient is outside India. (1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. (2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services: Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. (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 suppl....
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....pplied by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) intermediary services. (c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month. Explanation.-For the purposes of this sub-section, the expression, (a) "account" means an account bearing interest to the depositor, and includes anon-resident external account and a non-resident ordinary account; (b) "banking company "shall have the same meaning as assigned to it under clause (a) of section 45A of the Reserve Bank of India Act, 1934; (c) ' financial institution" shall have the same meaning as assigned to it in clause (c) of section 45-I of the Reserve Bank of India Act, 1934; (d) "non-banking financial company" means,- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or (iii)such other non-banking institution or class of such institutions, as the Reserve Bank of India may,....
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.... read with Section 16(1) of the IGST Act, 2017. The said provisions are extracted herein for ready reference: "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 are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; 16. (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:- (a) export of goods or services or both; 9.8. It is submitted that the Appellant does not constitute a liaison office or a permanent establishment for the H-J Families Group of Companies as per the service agreement between the Appellant and the said H-J Families Group of Companies. DISCUSSIONS AND FINDINGS 10. We have gone through the records of the case and considered the submissions made by the Appellant in their grounds of appeal as well as in the addition....
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.... of Companies. The latter specifies the presentation and the technical details of the said products. The Appellant reports to a Sales Manager based in the office of H-J Family of Companies in Europe and furnishes a report on the status of the sales development (with customers in the Middle East and Indian markets). The Appellant does not conclude contracts between H-J Family of Companies and the final customer and does not directly receive or deal with the products of H-J Family of Companies in any manner. It is also seen that the customers enter into contracts directly with H-J Family of Companies. 13. It is evident from the above arrangement that the Appellant is merely doing sales presentations of the Company's products to prospective customers in the Middle East and India. The sales presentations made by the Appellant to the prospective customers results in some customers directly entering into a purchase contract with the H-J Family of Companies for purchase of the Company's products. The service of making the sales presentations regarding the product of the Company amounts to facilitating the sales and distribution of products by the H-J Family of Companies. It is evid....
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....mily of Companies on their own account and they do not directly receive or deal with the products of H-J Family of Companies in any manner. In this connection, it would be worthy to analyse the definition of the term "intermediary services" under the GST regime and pre-GST regime. Both the definitions have been mentioned below: Under pre-GST regime Under GST regime Rule 2(f) of the Place of Provision of Services Rules, 2012 "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) between two or more persons, but does not include a person who provides the main service on his account Section 2(13) of Integrated Goods and Services Tax Act, 2017 (IGST Act) "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. 16. From the above definitions there does not seem to be any difference between the meaning of th....
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....TY FOR ADVANCE RULINGS wherein the Authority has ruled that pure marketing and promotion services would not be intermediary services. We have gone through the said ruling. The facts in the said case are that GoDaddy India provides a gamut of services to its client GoDaddy US and provides support services to assist GoDaddy US to develop its brand in India. A ruling was sought whether the various support services provided by GoDaddy India are naturally bundled as a single service being Business support service. The contention of the Revenue was that the various support services provided by GoDaddy India was not a bundle of services but more appropriately covered under 'intermediary service'. The Authority in the said case, after taking note of the fact that the applicant (GoDaddy India) will not be engaged in arranging or facilitating provision of services by GoDaddy US to customers in India, will not secure orders from customers in India or arrange or facilitate the provision of any service by any third party service provider to GoDaddy US, held that the applicant is providing support services in relation to marketing, branding, offline marketing, etc on principal-to-principal basis....