TaxTMI 
TaxTMI 
2020 (8) TMI 525
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.... Services (India) Pvt. Ltd., 3rd Floor, Discoverer Building, International Tech Park Bangalore, Whitefield Road, Bengaluru 560066 (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 114/2019 dated: 30th sept 2019 = 2019 (10) TMI 797 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant is engaged in the business of operation and maintenance of International Tech Park, Bangalore which includes operation and maintenance of electrical systems at common areas, building and civil repairs, maintenance of lifts etc. In addition, the appellant also arranges for the transport of its staff and employees of the corporate clients in the Tech Park who are the tenants of the business park (herein after referred to as 'commuters'). 4. For the purpose of arranging the transport facility, the Appellant has entered into a contract with Bangalore Metropolitan Transport Corporation (hereinafter referred to as 'BMTC') whereby BMTC allots 1 bus to the Appellant for every 50 passes purchased. The Appellant receives the following types of bus passes from BMTC for distribution: - Non AC regular BMTC bus pass; and - Combo bus pass which can ....
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....ted in 2018 (8) GSTL 32 (Del) = 2017 (9) TMI 632 - DELHI HIGH COURT which held that recipient of service is one who benefits from the service. 7.2 They submitted that it would be almost impossible for BMTC to get into a contract with each of the individual passengers and therefore, the contract is between the Appellant and BMTC; that the Appellant is merely facilitating transportation service between BMTC and the commuters; that owing to the practical difficulty of raising invoices in the name of each individual passenger i.e in the name of each employee of the tenant who are the ultimate beneficiary of the transportation service, BMTC raises a consolidated invoice in the name of the Appellant; that the Appellant issues a separate invoice for such facilitation and charges a facilitation fee of Rs. 300 and applicable GST at 18% as "Support services in transport". They submitted that apart from the facilitation charges, they receive the actual amount incurred to obtain such bus passes for distribution and therefore the Appellant cannot be held to be the service recipient of transportation service since the said services are primarily rendered to the commuters who are the ultimate be....
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.... the above, they stated that they satisfy the factors as stated below: Nature and Value: The Appellant in the instant case, does not alter the nature of service provided by BMTC. The Applicant merely recovers the cost of the bus pass from the commuters and the same is paid to BMTC. Essentially, BMTC provides transportation service by issuing bus passes, a service which is consumed by the commuters utilizing the bus passes. Separation of value: Being an intermediary the Applicant is receiving consideration in the form facilitation fee for arranging the transportation service by making the bus passes available to the commuters. The value of this service is clearly identifiable and recovered separately from the service recipients. This is also evidenced from the invoice. Identity and Title: BMTC is responsible for providing the buses and carrying out the transportation service. The responsibility of the Applicant is towards facilitation of the same. The same can be substantiated by the agreement between BMTC and the Applicant. 7.6. They relied on the decision of the Maharashtra AAR in M/s. Jotun India Pvt Ltd reported in 2019 (10) TMI 482 which held on a similar arrangement bet....
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....p 1 The concerned operations team of the Appellant raises request for BMTC bus pass for the month of July 2019 before 30th of June either based on mail request or the number of passes procured the previous month. Step 2 BMTC delivers the bus passes for the month of July 2019 on or before 30th June 2019. Step 3 The Appellant's operations team issues passes and raises invoice on customers based on the request for number of passes received for July 2019. Step 4 The Appellant's operations team returns the un-sold passes to BMTC on or before 10th July 2019. Step 5 BMTC raises invoice on the Appellant on or before 12t July 2019. Step 6 Appellant pays BMTC on or before 15 July 2019 for the bus passes of July 2019. 7.10 In view of the above the Appellant submitted the arrangement is merely facilitating or arranging transport facility and is delivering the bus passes to the commuters; that in the subject transaction, the Appellant has stepped into the shoes of facilitator who has helped bring about an outcome by providing unobtrusive assistance to both commuters and BMTC. They further submitted that they do not possess any transport service permits but merely facilitates t....
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.... including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods of supply of services; (d) Interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation, -- For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. They submitted that the value of bus pass is not covered under any clause of section 15(2) as stated above; that the supply of bus pass being a supply for BMTC, will not be covered under clause (b) of the said section; therefore the value of bus passes distributed by the Appellant to the commuters is not to be included in the value of facilitation charges in terms of section 15(2) ofthe CGST Act and KGST Act. PERSONAL HEARING: 8. The Appellants were called for a personal hearing on 10th January 2020 and were represented by Shri. Prashanth Bha....
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....uters? * Whether the value of the bus passes distributed by the Appellant to the commuters is to be included in the value of the facilitation charges? 10. As regards the first issue, we have gone through the agreement dated 30th March 2018 entered into between the Appellant and BMTC. The Appellant is a private limited company engaged in operating and maintaining the International Tech Park at Bangalore. It also arranges for the transportation of its employees as well as the employees working with the various corporate clients in the Tech Park. For this purpose, the Appellant has entered into an agreement with BMTC for supply of buses to transport the-to its employees and the employees of the tenants of the International Tech Park. As per the agreement, BMTC will provide the required number of chartered buses at the rate of 1 bus for every 50 bus passes taken by the Appellant. There are two types of bus passes provided by BMTC to the Appellant viz. Non-AC bus pass and Combo bus pass which can be used for both AC bus as well as non-AC bus. The rate payable by the Appellant to BMTC depends on the type of bus provided by BMTC i.e AC or non-AC bus. The agreed upon rate payable by the....
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..... We find that the Delhi High Court decision in the cited case does not support the case of this Appellant. In the cited case, the Hon'ble High Court was examining the elements of export of service by Verizon India and in that context held that the subscribers to the services of Verizon US may be 'users' of the services provided by Verizon India but under the Master Supply Agreement it was Verizon US that was the 'recipient' of such service and it was Verizon US that paid for such service. It was also held by the High Court that in order to determine who the 'recipient' of a service is, the agreement under which such service has been agreed to be provided has to be examined. When the Master Supply Agreement between Verizon India and Verizon US is examined, it is plain that the recipient of the service is Verizon US and it is Verizon US that is obliged to pay for the services provided by Verizon India. 12. Drawing a parallel to the instant case, we find that in order to determine who, the recipient of service is, the agreement under which such service has been agreed to be provided, has to be examined. When the Agreement between BMTC and the Appellant is examined, it is plain that ....
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....case, the same would have been apparent from the agreement itself and thus the first condition to be satisfied for a person to qualify as an "intermediary" is not fulfilled. Further, in addition to defining the nature of person, the definition of the term 'intermediary' contains an exclusion in as much as any person (including a broker, agent or any other person) who provides the main supply on his own account is not covered under the definition of the term "intermediary". The importance of this condition has been explained in the Education Guide released under the erstwhile service tax era, which holds true even under the GST regime. The Education Guide provides that a person 'who arranges or facilitates a provision of a service, but provides the main service on his own account is excluded from the definition of 'intermediary'. The Education Guide specifically recognizes and well explains that all situations of provision of services on a client's behalf, will not qualify as an "intermediary". Where the service is provided on the "own account" of the service provider, the categorization as an "intermediary" does not arise. The relevant extract of the Education Guide issued by the C....
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....is is a service provided by the Appellant to their clients' employees on their own account on a principal to principal basis as part of their business activity. The Appellant also acknowledges that they are rendering a service to the employees of their clients and they are also charging and collecting GST at 18% on such a service fee. This is evident from the copy of the invoice dated 10.07.2019 raised to M/s. Applied Materials India Pvt Ltd, Bangalore for the issue of bus passes for the period from 01.07.2019 to 31.07.2019, which was furnished by the Appellant. It is also seen from clause 13 of the Agreement with BMTC that all commuters travelling in the buses engaged by the Appellant shall possess the identification cards and the monthly passes issued by the Appellant. This evidences that the bus passes procured by the Appellant from BMTC are issued by them to the commuters as part of the service provided by them on their own account. If they were merely facilitating the service or acting as an intermediary, as claimed by them, the bus passes would have been issued by BMTC to the commuters. In the light of the above discussions, we agree with the ruling given by the lower Authori....
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....ssion of the claimant which shall be recognized as affording ground for relief by a civil court. These two categories of claims can be existent, future, contingent or conditional. However, every claim is not an actionable claim. It must be a claim either to a debt or to a beneficial interest in movable property. The beneficial interest is not the movable property itself, and may be existent, accruing, conditional or contingent. The movable property in which such beneficial interest is claimed, must not be in the possession of the claimant. An actionable claim is therefore an intangible right. The Appellant has likened the bus passes to recharge vouchers and have relied on the West Bengal Tax Tribunal decision in the case of Bharti Airtel Ltd vs ACST [2010 (34) VST 202] = 2010 (4) TMI 983 - WEST BENGAL TAXATION TRIBUNAL wherein it is held that recharge vouchers are acknowledgment of receipt of money in advance for rendering telecom services in future and as the money has been received in advance, it constitutes a debt to the service provider. At the outset we state that the case of Bharti Airtel Ltd was rendered by the West Bengal Tax Tribunal in the context of Sale of Goods Act whe....