TaxTMI 
TaxTMI 
2020 (8) TMI 523
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.... Act, 2017) by M/s. Cartus India Private Ltd, No 201, Prestige Sigma, 03 Vittal Mallaya Road, Bengaluru, 560001 (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 92/2019 dated: 27th Sept 2019. Brief Facts of the case: 3. Cartus India Private Limited (hereinafter referred to as 'CIPL' / 'the Appellant'), is a private limited company, engaged in supply of 'Relocation Management Service' to its clients located in India, which primarily involves facilitation/ administration/ management of relocation of client's employees from one location to another. 4. The essence of the Relocation Management Service agreement (hereinafter referred as 'RSA') entered between the Appellant and the Client is as follows: o The relationship established by the Relocation Management Service agreement is that of independent contractors, i.e. the agreement doesn't create any principal-agent relationship; o The Appellant has been engaged to provide the Relocation Management Services on non-exclusive basis which means that Appellant is entitled to employ another service provider in India; o The Appellant has no authority to sign documents on behalf of its client, i.e. the a....
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....ignment or subsequent assignments. 4 International Host Country Services customer will use Cartus and/or Cartus selected suppliers to provide International Host Country Services as detailed below A. Home Finding Programs 1) Accompanied Home Finding (By Cartus preferred Local Destination Service Provider ("DSP")). Employee is accompanied by DSP providing direct personal support throughout all home search activities. DSP coordinates home search activities, negotiates leases, and manage all real estate brokers. B. Leasehold Assistance 1) Lease Coordination and Negotiation. (For Employees who have already found a property). Lease review (if legal review is required the cost will be charged as a Direct Expense), negotiation of lease terms, coordination of all signatures required, property walkthrough and completion of a property condition form. 2) Leasehold Improvements. Assistance with negotiated improvements prior to move-in to property. Coordination of improvements and repairs to the property as required by the Employee and approved by the landlord. 3) Lease Coordination and Renewal. (For Employees who are extending lease at current location). Lease review (if legal review i....
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....uced below: "Cartus, in its role as a fully outsourced relocation service provider, will manage, administer and facilitate the relocation of Client's employees from one location to another, as directed by Client. Cartus will provide all required support and coordination necessary to complete an Employee relocation." 9. The Appellant is engaged by the client for supply of Relocation Management Services. For the same, Appellant has a right to engage third party contractors. However, there is a principal-to-principal contract and Appellant remains fully liable for efficient execution of the services including services provided by third party vendor to the clients. The actual services of relocation are provided by the Appellant and the third party suppliers, supplement the services to be provided to the client by the Appellant. In other words, there is no facilitation or arranging of services by another person to its client. 10. With the above background, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question: "Whether the gamut of services collectively referred to as "Relocation Management Service" provided by the applicant wou....
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....ny by the third parties, the Appellant submitted that the dominant intention is the rendition of relocation services in purview of which various other services i.e. visa facilitation, transportation services, temporary hotel accommodation services are rendered. These services are ancillary services directed towards relocating an employee. Appellant advertises and provides these services in form of a package and no individual services are rendered. The client also expects that these services should be provided in a package. The manner in which a service is perceived in common parlance and the way it is advertised are instrumental in determining the classification. Hence, it appears appropriate that these services be classified as a composite supply. 12.4. The Appellant also submitted that the impugned order has incorrectly recorded as a finding that, "each service has a separate service fees and the services are separately classifiable and if such services are billed in common invoice that does not amount to a naturally bundled supply and hence the same is not a composite supply. "They submitted that the question, whether an activity or service is rendered in the ordinary course of....
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....ion Guide prescribes that no straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of which are outlined above. 12.7. On a combined reading of the above and the definition of composite supply under the CGST Act, they submitted that it is essential to establish that in order to qualify as a composite supply, the different services are naturally bundled to each other and provided in conjunction with each other in the ordinary course of business. Thus, the aggregation of different elements of services when provided in conjunction with a single service gives such service the character of a single supply. In other words, where a transaction involves supply of two or more different taxable services, but are rendered by a supplier with a common aim or intention, each of the said different services should be construed to be clubbed/ aggregated together to provide the main intent of the supplier. The clubbed services are rendered under a single classification, which provides the most specific description to all the different elements o....
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....that services provided by the Appellant are mixed supplies classifiable under management support service of relocation related services; that the impugned order has placed reliance solely on the RSA whilst ignoring the SOW; that the impugned order is in violation of principles of natural justice as the following submissions were not considered and deliberated upon: * As per the SOW, it is clear that the Appellant is not engaged in rendering of individual and independent supplies of services to its clients. Rather, the services discernable as independent in the SOW are available as a part and parcel of the programs offered under the Relocation Management Service. * As per the SOW, it is also evident that, services provided by the Appellant are inter-connected with each other and cannot be supplied independently in the normal course of Appellant's business.. They relied on the following judicial pronouncements in this regard: a) S.N. Mukherjee v. Union of India reported in 1990 SCR Supl. (1) 44 = 1990 (8) TMI 345 - SUPREME COURT b) Testeels Ltd. v. N.M. Desai and Anr. AIR 1970 Guj. 1 =....
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....tion and hence, must be set aside. 12.14 As regards their objection to classification of its services under 'intermediary', the Appellant submitted that the Authority has passed the impugned order without considering the fact that the Appellant provides services on its own account it the clients and the same is done on no one's behalf. Therefore, they submitted that the Relocation Management Services provided by the Appellant are not covered under the definition of 'intermediary service' in terms of provisions of Section 2 (13) of the IGST Act, 2017; that the essential condition of being an 'intermediary' is that the 'intermediary' must merely facilitate the supply and must not provide main services themselves; that in the present case, the Appellant is providing the main service on its own account to the clients. There is no tripartite arrangement, wherein the Appellant is providing services of relocation on someone else's behalf. Therefore, the present arrangement cannot fall under the definition of 'intermediary'. The Appellant also submitted that since there is no arranging or facilitating a supply by the Appellant for someone else, the test of 'intermediary' is not satisfied ....
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....e appellant, is as follows: Authorized services as per the RSA Services as per the SOW Global Relocation Cost Estimate Policy Counseling and expense administration Candidate Assessment Temporary living Policy Development/Consulting Move management which includes: - Moving services - Permanent storage management - Insurance Policy Review Home finding programs Global Expense Administration Service Leasehold Assistance Immigration Process Settling in services Policy Counseling/Needs Assessment School finding assistance Culture Kits Departure programs Global Departure Services Driver's License Assistance Vehicle Programs Pre-decision orientation Global Transportation Coordination Post settling-in support Destination Services Inbound/Outbound which include: - Pre-assignment visit/Orientation tour - Arrival assistance - Temporary Housing assistance - Home finding program - School search program - Settling-in services/Host country formalities - Web based destination services Post property support Stored value card Lease cancellations Global Home Marketing Assistance Spousal Employment Assistance Other Auxiliar....
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.... or may be provided by third party service providers. 17. The role of the appellant in so far as third-party service providers are concerned is different in terms of the RSA and the SOW. As per the RSA, the client shall enter into service agreements directly with third-party suppliers providing services within the scope of the agreement. However, the third-party suppliers will address/issue their invoices to the client in the name of the client, but mail the invoices to the appellant for payment processing. The appellant shall forward the third-party supplier invoices to the client who shall provide the appellant the funds for disbursement to the third-party suppliers. Therefore, in the case of the RSA, the Appellant acts as an agent for the purpose of making payments to the third-party suppliers on behalf of the client. However, as per the SOW, the appellant is responsible for selection, management and direct payment of any third-party suppliers used to provide the services. The appellant will issue an invoice to the client for such third-party supplier services. Therefore, it is evident that in the case of the RSA, the appellant is acting only as a payment agent of the client fo....
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....pellant is not providing any service to the client but only acting as a payment agent for the services supplied by the third-party service provider directly to the client; or * The appellant enters into service agreements directly with the third-party service providers. The third-party service providers will bill the appellant for the service provided. The appellant in turn will bill the client a service fee (fixed rate as per the agreement) for the relocation service which has been facilitated by them through the third-party service provider as well as Direct Expenses which includes third-party payments/third-party supplier costs. In this case, the appellant is providing only a single service to the client which is facilitating the relocation service by the third-party service provider. 19. In view of the above, the determination of whether the supply is a composite supply or a mixed supply will arise only in the situation where the service is completely supplied by the appellant on his own account. The situations where the services are supplied by a third-party service provider will not be relevant for the determination of the question at hand, since, in such situations, the a....
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....cipal supply, shall be treated as a supply of such principal supply,. and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Section 2(30) of the CGST Act, 2017 defines "composite supply" as follows: "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration. - Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; Section 2(74) of the CGST Act, 2017 defines "mixed supply" as follows: "mixed supply" means two or more individual supplies of goods or services, or any combination thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration. - A supply of a package consisting of canned foods, swe....
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.... all the services which form a part of the package. As per Section 2(74) of the CGST Act, a mixed supply is a combination of a taxable services which is supplied for a single price. In the instant case, the package advertised by the appellate has a combination of certain basic services like Policy Counseling, home search, settling in, temporary living and travel coordination, together with immigration, car, school added to the package. The entire combination of services is charged to a single price. Therefore, such packages of bundled services is a mixed supply in terms of GST law and is to be taxed accordingly. 24. The appellant has argued that the dominant intention is to provide relocation service for which purpose various services are rendered and that all the services should be synthesized into a single composite supply of relocation service. We are not impressed by this argument. As already stated the determining factor for a composite supply is the fact that they are naturally bundled. In this case, the "naturally bundled" aspect of the transaction is not present. Undoubtedly the various services provided work towards the common end of relocating the employee. However, it c....