TaxTMI 
TaxTMI 
2020 (8) TMI 516
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.... 2017) by Mr. Rajendran Santhosh, D No. 2102, "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 b....
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....lso includes the amounts reimbursed to the applicant by the recipient of services for the expenses incurred. 8. The Appellant was aggrieved 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 independ....
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.... [Explanation - For the removal of doubts, it is hereby declared that for the purposes of thissub-clause, "inputs" means all goods or services intended for use by the client, (v) production or processing of goods for, 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....
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....he acts in the transaction in his capacity as mercantile agent; but he must not be a mere servant or shop man. In para 713 is stated : "A del credere agent is one who, usually for extra remuneration, undertakes to indemnify his employer against loss arising from the failure of persons with whom he contracts to carry out 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 p....
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....panies; that in terms of Section 2(13)(2) of the IGST Act, the place of supply of service of market research or other professional, technical and business services (not elsewhere classified), not being an intermediary service, shall be the location of the recipient of the service. Section 2(13) of the IGST Act has been extracted herein for ready reference: "13 - Place 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....
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.... territories and the value of such supplies specific to each State or Union territory shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. (8) The place of supply of the following services shall be the location of the supplier of services, namely: (a) services supplied 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 th....
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....nt of services is of taxable territory; (g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory. (13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service." 9.7. It is submitted that export of services should be classified as a zero-rated supply in terms of Section 2(6) 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 establishment....
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....that the only grievance of the Appellant is regarding the finding by the lower Authority that the management services are being provided in the capacity of an `intermediary' as defined in Section 2(13) of the IGST Act. In this regard, the nature of the transactions of the Appellant as explained by him in his appeal is examined. It is seen that the Appellant is appointed as an "Independent Regional Sales Manager for the Middle East and Indian Markets" by the H-J Family of Companies, a company engaged in the business of manufacturing and selling various categories of distribution transformer components and accessories. The Appellant is required to make a presentation of the products offered by the H-J Family 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 o....
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.... instant case, we find that the Appellant facilitates the sale of the products of H-J Family of Companies by undertaking sales presentations to the prospective customers in the Middle East and India. It must be appreciated that devoid of the product, there is no purpose in the sales presentations made by the Appellant. It is only with the sole intention of facilitating the sales of the product of the principal i.e H-J Family of Companies that the Appellant provides the service. 15. The definition of 'intermediary' as given in Section 2(13) of the IGST Act excludes a person who supplies such goods or services or both on his own account. It is the contention of the Appellant that the services of sales presentation are being provided to fl-J Family 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 ....
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....son either 'facilitates' or alternately 'arranges' any supply of goods or service (or both), between two or more persons, and does not supply such goods or service (or both) on his own account, he would be regarded as an `intermediary'. At the risk of being repetitive, the Appellant is clearly facilitating the supply of the products of H-J Family of Companies directly to the latter's customers and is not supplying such goods on his own account. Therefore, the Appellant does not fall within the ambit of the exclusion. 18. The Appellant in his grounds of appeal has relied on the ruling given by the Authority of Advance Rulings under the Service Tax provisions in the case of GoDaddy India Web Services (P) Ltd Ruling No AAR/ST/08/2016 = 2016 (3) TMI 355 - AUTHORITY 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 provide....