TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1454
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....ARASHTRA. BRIEF FACTS OF THE CASE 1. Mayank Jain ("the Appellant") is an individual exploring business opportunity in providing marketing and advisory services to the Consultant Managers in relation to the Employee Based Immigration: 5th Reference Program notified by the United States Citizenship and Immigration Services ("the EB-5 Program"). The EB-5 Program envisages that an investor is eligible to a permanent residence permit in the United State of America subject to an investment of US$ 500,000 and job creation in a commercial entity or investment fund, commonly referred to as a "Regional Centre" or a "Company", which is approved and recognized by the Government of the United States of America. "Consultant Manager" (located outside India) acts for the Regional Centre or Company enabling them to receive investments from the prospective investors. 2. Under the proposed Agreement titled as "Foreign Immigration Advisor Agreement", the Appellant shall provide two distinct services, viz., (i) Marketing services; and (ii) Handholding services, as detailed below: i. Marketing services: a. Collecting and analysing information i.e. market analytics, intelligence, preparing and dra....
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....e marketing services to the Consultant Manager. The Appellant is an independent service provider and would be providing services at his own risk and cost. It is also expressly provided in the proposed Agreement that neither party would represent itself to be an agent of the other nor shall either party accept service of legal process or create or assume any obligation of any kind or nature whatsoever on behalf of the other party. Further, the Appellant would not have the authority to conclude or negotiate any contracts or secure any orders on behalf of the Consultant Manager. ii. In fulfilment of its obligation towards Marketing services, the Appellant would undertake the following activities: a. Planning and conducting market surveys to identify the market and prospective investors; b. Prepare reports, marketing plans, market intelligence and compile list of prospective investors; c. Formulate strategy; d. Address queries of the Consultant Manager in relation to the above; and e. Conduct sales prospection. iii. The Appellant would not fall within the ambit of the definition of 'intermediary' on account of the following reasons: a. Only persons appointed in represen....
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....nal meeting about EB-5 program. d. Assistance relating to documentation. e. Provide information collecting documents, filling out forms, addressing any possible issues or difficulties. f. Communicate immigration status / processing related updated to the qualified investor. iii. The Appellant would not fall within the ambit of the definition of 'intermediary' on account of the following reasons: a. The Appellant will never participate in the actual sales negotiation or profess to act on behalf of the Consultant Manager or help in concluding the investment by the prospective investor. b. The Appellant and the Consultant Manager will have no authority to create, nor will they assume any obligation on behalf of each other. The services rendered by the Appellant will be limited in this respect. Although the Appellant would assist the person of interest in filling of the forms, providing direction to get the necessary security clearances, and getting together all the financial information required as per the Consulting Manager, these duties are purely procedural in nature and do not at any point in time extend to facilitating the investment. c. The Appellant has no role wh....
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....der Business Auxiliary Service which is not the main service provided by the main service providers namely banks / university. * As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges / banks. In those circumstances, the appellant cannot be called as intermediary. The Appellant stated that there is no change in the definition of the 'intermediary' under the erstwhile service tax regime vis-a-vis GST regime and the services provided by the Appellant is similar to the services referred in the above case. Hence, it cannot be regarded as intermediary. b. In addition to the above, the Appellant further placed reliance on the following precedents: * Godaddy India web Services Pvt. Ltd. [2016 (46) STR 806 (AAR)] = 2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS; * Universal Services India Pvt. Ltd. [2016 (42) STR 585 (AAR)) = 2016 (5) TMI 750 - AUTHORITY FOR ADVANCE RULINGS; * Asahi Kasei India Private Limited [GST-ARA-35/2018-19/B-108 dated 5 September 2018] = 2019 (1) TMI 1091 - AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA. 7. Without considering the facts of the case and submissions made by the Appellant (referred supra), AAR ....
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....ent authority is normally received vide postal services and not email. 12. The Applicant humbly submits that there has been plethora of cases wherein the Courts have taken leniency in Condonation of delay beyond 30 days. The Appellate Authority for Advance Ruling (in past) has condoned a delay of 29 days and 26 days in various cases. Reliance in this regard is place on the following decisions: * In the case of In Re T.P. Ajmer Distributors Limited [RAJ/AAAR/APP/02/2018-19] = 2019 (3) TMI 917 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN, the Appellants submitted that there was a delay in filing the appeal because GST was a new law and the Appellant was not aware about the provisions of law and only after the advice of the advocates, the Appellant became aware about the same. Further, the Appellant submitted that the CFO was occupied in handling the queries and requirement of the Auditors for the quarterly Audits of the company which delayed the appeal. The Court condoned the delay of 29 days and accepted the appeal. * Similarly, in the case of In Re Kundan Mishthan Bhandar [UK/GSTARA03/08] = 2019 (5) TMI 312 - APPELLATE AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND, there w....
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.... as that of a middleman, and therefore, the observation of the AAR is based on assumptions, presumptions and surmises. 16.3 It is submitted that the as a part of the marketing services, the Appellant arranges the premises for the Consultant Manager and prospective investor to meet and negotiate/ discuss at their discretion and without interference of the Appellant. Thus, the role of the Appellant is limited to arranging meeting venue, and the Appellant does not take part in the discussion between the investor and the Consultant Manager. 17. The Appellant does not fall within the definition of "intermediary" for Marketing services or for Handholding services 17.1 The term "intermediary" is defined under Section 2(13) of the IGST Act as under: "(13) "'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;" 17.2 It is clear from the above definition that the definition of "intermediary" has been divided in to three limbs: a A broke....
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....cludes; those services which are normally rendered by banks or financial institutions. 4. Hence, banking and other financial services provided by a banking company or a financial institution or a nonbanking financial company or any other service provider similar to a bank or a financial institution are liable to service tax under section 65(105) (am) of the Finance Act, 1994. Department of Posts is not similar to a bank or a financial institution and hence does not fall within the category of any other similar service provider" (Emphasis supplied) 17.5 Reliance in this regard is also placed on the Hon'ble Delhi High Court decision in the case of Areva T & D India Ltd. Vs. DCIT [2012-TIOL-234-HC-DEL-IT] = 2012 (4) TMI 79 - DELHI HIGH COURT wherein the Hon. Delhi High Court applied the principle of ejusdem generis to interpret the expression "business or commercial rights of similar nature" referred to in section 32 (1) (ii) of the Act and held that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which were neither feasible nor possible to exhaustively enumerate. 17.6 The....
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....ve consideration from overseas Consultant Manager. 17.10 The Appellant submits that the dictionary meaning of facilitation is to make easy or easier, make something possible or aiding or helping. Thus, the dictionary meaning of facilitation is very wide and covers processing, storage, transport, advertising, sales promotion etc. all activities as each and every activity aid or smoothens supply of goods. In the instant case, the Appellant will act as independent service provider in carrying out the marketing activities for the Consultant Manager. The Appellant is acting on their volition and simpliciter providing services to the Consultant Manager. Consequently, no question of facilitation arises. 17.11 In respect of the third and last limb, i.e. but does not include a person supplying such goods or services or both or securities on his own account, the AAR has erroneously held that the Appellant does not provide services on his own account. He will facilitate the provision of service of the investment/ permanent resident advisory by the Consultant Manager to the investor. 17.12 It is submitted that in case the supplier provides services on his own account, he would not be regard....
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....ave no direct nexus with the customers of their client and nowhere has facilitated or arranged for the services provided to their client by third party. Therefore, the activity undertaken by the appellant do not qualify intermediary. b. M/s Sunrise Immigration Consultants Private Limited v CCE & ST, Chandigarh [2018-TIOL-1849-CESTAT-CHD] = 2018 (5) TMI 1417 - CESTAT CHANDIGARH In this case, the facts were that the Appellant provided services to foreign universities by way of preparing cases for students was questioned as not being an export but covered within the definition of intermediary under the erstwhile service tax law which was identical to the intermediary definition under GST. Therein, after a detailed discussion, it was held that the Appellant was not an intermediary but an independent service provider providing services of business support to the foreign universities/ foreign banks for which a commission is paid to the Appellant upon each successful admission. The relevant parts are provided below for ready reference: "2. The facts of the case are that the appellant is providing various services (A) Visa Facilitation Service and (B) Referral Service. W.e.f. 01.07.2....
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....omoting the business of the Consultants. c. Re: GoDaddy India Web Services Pvt. Ltd. [2016 (46) STR 806 (AAR)] = 2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS: In this case, in addition to marketing services, the Appellant therein was also providing supervision of customer care service and payment processing services to their parent entity, GoDaddy US, a company registered and incorporated in the United States of America. After due consideration, it was held that the Appellant was not an intermediary under the Finance Act, 1994. The relevant parts are reproduced below for ready reference: 4. Applicant seeks rulings with regard to the following questions of law. Question No.1: Whether, in the facts and circumstances as explained in Annexure I, the various support services proposed to be provided by the Applicant to GoDaddy US are a "bundle 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? 10. The definition of "intermediary" as envisaged under Rule 2 (f) of POPS does not include a person who provides the main service on his own....
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.... value of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the principal. Separation of value: The value of an intermediary's service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase price. Generally, the amount charged by an agent from his principal is referred to as "commission". Identity and title: The service provided by the intermediary on behalf of the principal is clearly identifiable. Even in other cases, wherever a provider of any service acts as an intermediary for another person, as identified by the guiding principles outlined above, this rule will apply. Normally, it is expected that the intermediary or agent would have documentary evidence authorizing him to act on behalf of the provider of the 'main service'. In simple term intermediary means a person who acts to a....
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....e case of Sunrise Immigration Consultants (Supra). In both cases, it was held that the service provider was engaged in providing service on his own account and hence would not become an intermediary. The Appellant cannot be regarded as an intermediary as the Appellant cannot in any way change or amend or influence the agreement between the Consultant Manager and interested individual. 17.15 Considering the above judicial precedents and the facts of the present case, it is submitted that the services provided by them would not be regarded as an intermediary on account of the following reasons: a. Services provided by the Appellant, whether by way of Marketing services or the Handholding services, does not have direct nexus with the services provided by Consultant Manager to the prospective investor. b. The Appellant at no time acts between the Consultant Manager and the prospective investor. The Appellant is kept out of any discussion with respect to investment proposition between the Consultant Manager and the prospective investor. He neither takes part, or negotiate, or kept in the position so as to influence the decision of either party. Hence, the Appellant cannot be regard....
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.... 1983 (10) TMI 51 - SUPREME COURT: "......It has long been recognised that the measure employed for assessing a tax must not be confused with the nature of the tax. In Ralla Ram v. The Province of East Punjab - (1948) F.C.R. 207, AIR 19.../9 FC 81), = 1948 (11) TMI 8 - BOMBAY HIGH COURT, the Federal Court held that a tax on buildings under Section 3 of the Punjab Urban Immovable Property Tax Act, 1940 measured by a percentage of the annual value of such buildings remained a tax on buildings under that Act even though the measure of annual value of a building was also adopted as a standard for determining income from property under the Income-tax Act. It was pointed out that although the same standard was adopted as a measure for the two levies, the levies remained separate and distinct imposts by virtue of their nature. In other words, the measure adopted could not be identified with the nature of the tax....." b. Kerala Colour Lab. Association Vs. Union of India [2003 (156) E.L.T. 17 (Ker)] = 2002 (1) TMI 1241 - KERALA HIGH COURT: In this case, it was held that taxable event occurs because of the service rendered. Merely because the measure or valuation of tax is linked to t....
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....nce Ruling, Mumbai, with consequential relief; 2. Pass an order holding that the services of the Appellant would not be regarded as that of an intermediary; 3. Pass an order holding that the services of the Appellant would qualify as export of service Pass any other order or orders as deemed fit and proper in the circumstances of the case. 4. Pass any other order or orders as deemed fit and proper in the circumstances of the case. RESPONDENT'S SUBMISSION DT. 04.1.2019 Point A & B: 'The impugned Ruling is grossly erroneous on the facts and bad in law as it disregards judicial precedents and liable to be set aside; that w.r.t marketing services has been passed based on incorrect understanding of the facts': 22. The Applicant seeks to provide such services to their clients (the Company or to their Consultant Managers), located in the United States of America, with the aim of enabling them to receive prospective investors located in India, for obtaining permanent residency in the United States of America. The services provided by the Applicant to the consultant managers shall inter-alia, include: i. Collecting and analysing information i.e., market analytics, intelligence, p....
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....goods or services or both; iii. An intermediary cannot change the nature of supply as provided by his principal. 26. Therefore, it is evident that in case of intermediary services, such supplies essentially involve three persons; principal whose goods or services are being supplied, and recipient who are receiving the supply of goods or services or both, and an intermediary in between. In the instant case, the Applicant is acting as the facilitator between the Company and the prospective investors. 27. The operative part of the definition of "intermediary" is "who arranges or facilitates the supply of goods or services or both or securities". Thus, an intermediary is one who arranges or facilitates supply of goods or services or both, belonging to the principal. Therefore, the nature of goods or services supplied by the intermediary must be same as goods or services supplied by the principal. An intermediary cannot alter the nature or value of supply, which he facilitates on behalf of his principal, which is found to be valid and true in the present case also. 28. The consideration for an intermediary's supply is separately identifiable from the main supply that he is arrangin....
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....rt services being/to be provided by applicant in the instant case to the company located abroad would be appropriately classifiable as 'intermediary services' and the applicant would be covered in the definition of 'intermediary' in terms of Section 2(13) of Integrated Goods and Services Tax Act, 2017. Accordingly, the impugned Ruling is proper and valid as per law. Point No. C: - 'The Applicant does not fall within the definition of "intermediary" for Marketing services or for Handholding services. Department Comments: - 32. From the facts and issues as stated and discussed in the sub-paras 1-8 of Point 'A' above, it appears that the Applicant is authorized by the Company to act and represent them on their behalf and carry out such functions viz. marketing of the EB-5 program in India to prospective investors and to perform the immigration and administrative related duties on behalf of the Company. Therefore, the Applicant by way of acting on behalf of the Company for performing the immigration and administrative related functions of the Company towards their prospective investors, is essentially acting as an agent/representative of the company in India, i.e. the intermediary.....
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....wing services shall be the location of the supplier of services, namely: (a) Services that are supplied by a banking company or a financial institution or a non-banking financial company to its account holders; (b) Intermediary services; (c) Services that consist of hiring of the means of transport up to a period of one month. Such means of transport includes yachts but excludes aircrafts and vessels. Hence on the basis of above the provisions of section 13 (8)(b), it is pretty clear the place of supply of the intermediary service would be location of the supplier of services, i.e., the intermediary. In the instant case, the location of the Applicant (the intermediary) is the taxable territory of India. Further, it was pointed out in the earlier Department Reply to the AAR on the instant issue or question pertaining to 'Place of Supply' is not covered under the mandate of issues given for consideration of the Advance Ruling Authority under the provision of Section 97 of the CGST Act 2017. Hence, the said question appears to be non-relevant for consideration before the AAR. However, it is observed that the AAR has rightly interpreted this question raised by the Applicant, ....
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....ss or prejudice would be caused to the Revenue if the aforesaid prayers for the condonation of delay are accepted. He also cited few judicial precedents, wherein the court has taken lenient view on the issue of the condonation of delay in filing the appeal. which is being filed within the maximum permissible time of 60 days including the maximum condonation period of 30 days allowed under the proviso to sub-section 2 of section 100 of the CGST Act, 2017. We agree with the submissions made by the Appellant in this regard. Further, the Jurisdictional Officer, in the present case, has also not contended the present application for the condonation of delay in filing the appeal. Therefore, we are satisfied to the extent that the said delay of 2 days in the filing the appeal was not deliberate on the part of the Appellant. Further, the Appellant has filed the present appeal within a further period of 30 days in terms of proviso to sub section 2 of section 100 of the CGST Act 2017.Hence, we condone the said delay of 2 days in filing the present appeal, and set out to examine the present appeal on merit. 38. We have gone through the entire case records encompassing the facts of the case,....
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....t, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; Thus, from the above definition of the term "agent", it is revealed that the agent undertakes the supply of goods, or services, or both, on behalf of its principal, who must have authorized such person to undertake such supply. Thus, the Agent is undertaking the supply of the same goods or services or both as those of its Principal. 41. Therefore, in view of the above meaning assigned to the term "Agent" and nature of its activities as interpreted above, it may decisively be inferred that there is fundamental difference between the term "Agent" as defined under section 2(5) of the CGST Act, 2017 and term "Intermediary" as defined under section 2(13) of the IGST Act, 2017 due to the presence of the condition, prescribed under section 2(13) of the IGST Act, 2017, which stipulates that the person, acting as an intermediary, from his own account, should not supply such goods or services or both, which are being facilitated by him, whereas the Agent undertakes the same supply of goods or services or both as those of its Principal. The fact that Agent and Int....
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....rved that all such activities are culminating into the exploration and identification of the prospective investors, who would be investing their money in the EB-5 programme of the USA on the consultancy or advices provided by the Consultant Managers, who will be charging certain consultation fee from such interested investors. Now, it is expressly mentioned in the subject agreement that the Appellant would be receiving a fixed amount of consideration from their client, i.e. Consultant Manager, only after the successful completion of the deal between the Consultant Manager and the prospective customers, who have been identified, persuaded, and ultimately referred by the Appellant to such Consultant Manager after carrying out all these above enumerated activities, viz.- planning, research, surveys, formulation of strategy, sales prospection through various participation in industrial events, which eventually resulted into identification of the pool of prospective investors, interested in the said EB-5 programme. Out of this pool of investors, who eventually enter into contract with the Consultant Managers for investing their money in the EB-5 programme, after receiving the investment....
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....lding services rendered by the Appellant in terms of the subject agreement are enumerated as under: a. Identify and report to the Consultant Manager, the prospective investors who qualify the eligibility criteria and are willing to deposit the requisite amount in an escrow account and pay applicable fees for the purpose of EB-5 programme. b. Assist the Consultant Manager in obtaining personal information of the qualified investor. c. Assist the qualified investor in coordinating and staffing informational meeting about EB-5 program. d. Assistance relating to documentation. e. Provide information collecting documents, filling out forms, addressing any possible issues or difficulties. f. Communicate immigration status / processing related update to the qualified investor. Thus, on perusal of the abovernentioned bucket of hand holding services, it is observed that the Appellant is doing nothing but facilitating the supply of main services, i.e. investment related consultancy services, which are actually provided by the Consultant Manager to the prospective investors. To put this very observation into clearer perspective, it can also be said that if there was no Appellant ....
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....ellant further submitted that since they do not act as an agent or broker of his client, i.e. Consultant Manager, they would not fall under the category of Intermediary. It is observed that the above- mentioned arguments put forth by the Appellant is flimsy and devoid of any merit, as it has been established herein above that under the GST law, agent and intermediary are two different and independent concepts, and therefore, it is not mandatory for an intermediary to be acting like an agent as envisaged under section 2(5) of the CGST Act, 2017. Hence, the contention made by the Appellant in this regard in clearly not tenable. 46. The Appellant has placed reliance on Circular No. 107/26/2019-GST dated 18 July 2019 wherein the CBIC has clarified that the definition of intermediary inter alia provides specific exclusion of a person, i.e., that of a person who supplies such goods or services or both or securities on his own account. Having regard to this CBIC Circular dated 18.07.2019, here it is worthwhile to mention that such persons have been excluded from the periphery of the intermediary, who themselves supply, from their own account, the main services, to its client's customers ....
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....for the facilitation of the main services, i.e. Investment Consultancy/Permanent Residence Advisory services provided by its client, i.e. Consultant Manager and its customers, i.e. prospective investors. Since, the Appellant does not provide the main services, i.e., Investment Consultancy/Permanent Residence Advisory services from his own account, therefore, he may aptly be considered as intermediary under the facts and circumstances of the present case. Thus, the reliance placed by the Appellant on the CBIC Circular does not support his cause. 48. The Appellant, in defense of their case, has, inter alia, relied upon the various judicial precedents, which are being considered herein below: (i) M/s Evalueserve.com Pvt. Ltd. v CST, Gurgaon [2018 (3) TMI 1430- CESTAT Chandigarh] In this case, the appellant was registered under Service Tax under the category of business Auxiliary Services. The appellant filed claim for refund of unutilized CENVAT credit availed on input services used for providing taxable services, inter alia, Business Research (including financial services), Market research and intellectual Property activities, classifiable under the category of Business Auxiliar....
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....care service and payment processing services to their parent entity, GoDaddy US, a company registered and incorporated in the United States of America. In this case, the Hon'ble CESTAT, inter alia, observed that applicant is providing main service, i.e., "business support services" to WWD US and on his own account. Therefore, applicant is not on "intermediary" and the service provided by him is not intermediary service. Thus, the facts and circumstances of the aforesaid case is entirely different from those of the present case, as the Appellant, as discussed above, is not providing the main services in the present case as opposed to the facts of the case concerning GoDaddy India Web Services Pvt. Ltd., where GoDaddy India was providing marketing services, supervision of customer care services and payment processing services, which are independently provided to their parent company GoDaddy U.S., and which do not have any nexus between the main services provided by GoDaddy U.S. to its customers. Thus, the ratio of the aforesaid CESTAT Judgment is clearly not applicable. 49. The Appellant, inter alia, relied upon the below mentioned case laws to support their argument that that the ....