TaxTMI 
TaxTMI 
2020 (8) TMI 523
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....ter referred to as CGST Act, 2017 and SGST 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 h....
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.... in long term storage at the origin or destination location and remain in storage for the duration of the assignment 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) ....
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....ve of the Appellant rendering Relocation Management Service can be substantiated by referring to the Objective and Scope clause of the SOW, that is reproduced 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) s....
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....single supply of relocation of client's employees. 12.3. In response to the finding of the AAR that the actual supply of relocation services is between the third parties to the Company and the invoicing is also done to the Company 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 servi....
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....ation, transportation services, temporary hotel accommodation services are rendered under the ambit of relocation services. Such services are in the present case and ordinarily as well, bundled together under relocation services. They submitted that the Education 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 sa....
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....dle of services" being naturally bundled in the ordinary course of business and accordingly is a single service, being business support service, in terms of Section 66F of the Finance Act. 12.10. The Appellant submitted that the impugned order has incorrectly held 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 judic....
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....ellant is a composite supply or mixed supply; that the Authority has proceeded beyond the said question and given a ruling holding that services provided by the Appellant are covered by the definition of 'intermediary'. Therefore, the impugned order has travelled beyond the questions raised in the Appellant's application 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 Appel....
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.... these two documents in detail. We find that in both cases, the Appellant has been engaged by their clients to provide relocation services for the employees of the client. The types of activities as per each of the above agreements, which form part of the relocation management services and which are required to be performed or procured by the 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-a....
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.... Policy Counseling Temporary living Expense management Employee Travel Coordination Car Lump Sum with Destination Services Services include: Policy Counseling Expense Administration Destination services Coordination (Accompanied Home Finding, School Finding Assistance, Leasehold Assistance, Settling in Services) 16. Under both the above agreements, the appellant is responsible for providing or procuring services which are necessary to complete an employees' relocation. The services to be performed by the Appellant may be performed by telephone as well as in person 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 s....
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....provides the services by himself, the appellant bills the client the service fees for the a la carte services opted for by the client as per the rate card in the agreement. In case the client opts for the bundled package, a single price is charged as per the rate agreed upon in the agreement. • Where the appellant engages a third -party service provider to provide the service to the client, either of the following methods are adopted: • The third-party service provider enters into an agreement with the client and bills the client directly for the service but receives the payment from the appellant who acts as a payment agent of the client. In this case, the appellant 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 facil....
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....e of bundled services, then the service fee is a single price for the package. The question is whether the provision of five individual services (a la carte services) and the package of bundled services amounts to a composite supply or a mixed supply of services. 21. Determination of the question whether a supply consisting of two or more goods or services or both is a composite supply or not should be guided by the provisions of the GST law. The relevant provisions on the CGST Act are reproduced below: Section 8. The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: - (a) a composite supply comprising two or more supplies, one of which is a principal 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 combi....
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....aturally bundled. They are bundled based on the requirement of the client. Therefore, we do not agree that the supply of a la carte services by the appellant for employee relocation constitutes a composite supply. It is simply a case of the appellant supplying different taxable services as part of his mandate to manage, administer and facilitate employee relocation. 23. As regards the packages which the appellant offers, it is seen that the package is a bundle of services put together by the appellant as per his business model. What is bundled and put together by the appellant as part of his business model cannot be termed as 'naturally bundled". However, unlike the a la carte services, in the case of a package, there is a single rate which is charged for 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 p....