TaxTMI 
TaxTMI 
2021 (3) TMI 1344
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....1 & 2, Near Weikfield, Lonikand Taluka, Haveli, Pune. Maharashtra- 412216 ("hereinafter referred to as "the Appellant") against the Advance Ruling No. GST-ARA-20/2019-20/B-59 dated 15.12.2020, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as MAAR). BRIEF FACTS OF THE CASE 3.1 The Appellant are, inter alia, engaged in manufacture and supply of electric transformers and static converters, electric wire and cables for transmission of electricity, equipment for spark ignition, installation and commissioning services for t electric transformers. 3.2 M/s. Prettl GmbH, the company incorporated in Germany (hereinafter referred to as "the Principal"), is the holding company of the Appellant. The Prettl GmbH desires to join the 'develoPPP.de programme' run by the German Federal Ministry for Economic Cooperation and Development. Under the 'develoPPP.de programme', the German Government enters into development partnerships with the private sector in order to promote services provided by the private sector that go beyond entrepreneurial commitment and make driving force for economic, social and ecological sustainable development. 3.3 Und....
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....9; then whether the said activity is to be considered as 'exempted supply' or 'non-taxable supply' and accordingly input tax credit is to be reversed in accordance with section 17 of CGST Act, 2017 / MGST Act, 2017 read with rule 42 of Central Goods and Services Tax Rules, 2017 / Maharashtra Goods and Services Tax Rules, 2017? (iii) If, the above activity is considered as supply of service, then whether the same is classifiable under SAC 9997 as 'other services nowhere else classified' under SI. No 35 of the Notification-11/2017- Central Tax (Rate) dated 28.06.2017 / Sl. No. 35 of the Notification- 11/2017-State Tax (Rate) dated 29.06.2017 / SI. No. 35 of the Notification-8/2017- Integrated Tax (Rate) dated 28.06.2017? (iv) Where the said activity if considered as supply of service, then whether the same is covered as 'Zero Rated Supply' and qualifies for 'export of service' under the provisions of the Integrated Goods and Services Tax Act, 2017 and can be exported without payment of IGST? 2.6 The MAAR, vide Order No. GST-ARA-20/2019-208-59 dated 15.12.2020, held that the gamut of activities carried out by the Appellant i....
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....absence of any evidence in support of the said observation that the activities or services supplied by the Appellant to the German Holding Company M/s. Prettl GMBH are related to the event. (ii) Once the classification of the service has been held by the MAAR as 'Agreeing to do an act' specified under the SAC 999792 of the Notification No. 11/2017-Central Tax (Rate). dated 28.06.2017, then the MAAR cannot hold that the services provided by the Appellant to their German Holding Company would be event based / event related services for the purpose of determining the place of supply. That is, on one hand when it has been held that the services supplied by the Appellant are covered as 'Agreeing to do an Act" and classifiable under the SAC 999792, then on the other hand, the services cannot be treated as event based / event related services for the purpose of seeking 'place of supply' of the said services. Therefore, the impugned MAAR Order is self-contradictory on this point. (iii) That there is no event held by the Appellant at all. Even, the MAAR Order has also not established that any event has been held in India. (iv) That the activiti....
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....cipal based in Germany. Therefore, the said supply of services will not be construed as export of services as all the conditions for the export, prescribed under Section 2(6) of the IGST Act, 2017, are not satisfied. PERSONAL HEARING 7.1 A hearing in the matter was held in the virtual mode via video conferencing on 04.03.2021, which was attended by Shri Deepak Naik as the representative of the Appellant, and by Ms. Usha Bhoyar, Deputy Commissioner as the Jurisdictional officer/Respondent, in the subject appeal matter. 7.2 During the course of the said hearing, Shri Deepak Naik reiterated the earlier written submissions made in the Appeal memorandum and the additional submissions dated 01.03.2021 filed in response to the reply dated 04.02.2021 filed by the jurisdictional officer/Department in the subject appeal matter. The extracts of the aforesaid additional submissions dated 01.03.2021 filed by the Appellant are as under: (i) that the Department/Respondent has not identified the place of supply by referring anyone of the specific provisions of the IGST Act, 2017 in as much as the Department/Respondent has discussed two alternate options in connection with the pla....
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....st) is applicable only where individuals are represented as recipient of service or acting on behalf of the recipient; that in the present case, the individuals and beneficiaries, like, students, unskilled workers, and apprentices, are neither the recipients of the services itself (i.e., Prettl GmbH) nor they are appearing as employees or representatives or acting on behalf of the Prettl GmbH; (ix) that the provision under Section 13(4) as being contended by the Department is not applicable in the subject case as the said provision covers the services provided in relation to the immovable property; that the Appellant has not provided any services to the recipient in relation to the immovable property; (x) that the construction of the training centre within the production area of the Appellant's factory as per the Agreement entered with their Principal along with the various machineries, tools, equipment used for the on-job training of the candidates under the impugned programme are not transferred to their Principal, i.e., Prettl GmbH in any form or manner; that the said training areas with all facilities is also used by the Appellant in the ordinary course fo....
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.... (i) that the activities carried out and cost incurred on the project by the Appellant are not limited only on account of training to individuals such as apprentice, unskilled workers, students but the same are also carried out to perform other functions, like creation of training area and training facilities such as plants and machineries, tools and equipment which are also used for the in-house training of their regular employees, providing support to the educational institutions, namely- (a) in designing their course contents, in developing their teaching aids and instruction materials like working models, slides, video and work books, (b) in campus development like solar lighting systems, garden development, drinking water facilities and the like, (c) sponsoring course fees, uniforms, canteen and hostel fees, social and cultural activities and the like, (d) payment of stipend to apprenticeship trainees, etc. (ii) that the cost incurred on afore-mentioned various activities by the Appellant are far more than the than the cost incurred on the mere training to individuals, thereby, evidencing that the activities carried out and cos....
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....ties carried out by the Appellant qualify for 'export of service' under the provisions of the Integrated Goods and Services Tax Act, 2017 and can be exported without payment of IGST, the MAAR has held that the since the activities undertaken by the Appellant in terms of the Service Agreement entered with their German holding company can be construed as "event based services", the place of supply in that case would be determined by Section 13(5) of the IGST Act, 2017, which provides that place of supply in such cases would be the place where the event is actually held. The MAAR has further held that since the said event has taken place in India, i.e., in the taxable territory, therefore, the services provided by the Appellant do not qualify for the export of services in terms of Section 2(6) of the IGST Act, 2017. 9. Having gone through the above appeal memorandum, and the rulings of the Maharashtra Advance Ruling Authority (MAAR) on the question raised by the Appellant, the questions raised by the appellant before us is as under; (a) Whether the impugned activity if covered under the meaning of 'supply of service', whether the same is covered as 'Zer....
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....dled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; In the present case, the Appellant is undertaking multiple taxable supplies of services such as construction of training workshop, providing training to apprentices, unskilled workers, students of various technical institutes, etc. All these activities, which are being supplied in conjunction with each other, can aptly be said to be naturally bundled where the principal supply will be training services being provided to the various candidates as mentioned above. The activities related to the construction of the training workshop can be construed as ancillary services to this principal supply, i.e., training service, provided to various candidates as the same are essential for the said principal supply. 11. Through their additional submissions dated 01.03.2021 and 05.03.2021, the Appellant have submitted that apart from the training services provided to the apprentices, unskilled workers, and students, they are undertaking various other activities such as construction of the training area and provision of the training facilities such as plants and machinerie....
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....place of supply in this case cannot be determined in terms of Sections ranging from 13 (3) to 13 (13) of the IGST Act, 2017, therefore, the provision of Section 13 (2) ibid., prescribing the place of supply as the location of the recipient, will be applicable in the subject case. 12. With regard to the above additional submissions filed by the Appellant, it is observed that all the activities being carried out by the Appellant are either ancillary or incidental to the principal supply, which in this case, is the supply of training services since it is not in dispute that all these activities carried out by the Appellant are towards achieving the main objectives, i.e., providing training to the candidates, like apprentices, unskilled workers, students, etc. as per the terms and conditions of the Agreement entered with their German Principal, i.e., M/s. Prettl GmbH for which they are receiving consideration from their Principal. It is noteworthy that the Appellant themselves have submitted before this Appellate Authority that they are required to undertake the following activities under the said develoPP.de programme run by their German Principal M/s. Prettl GmbH for the considera....
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....ssified the activities undertaken by the Appellant under the SAC 999792 bearing the description "Agreeing to do an act" in terms of the entry at SI. No. 718 of the Annexure to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. As regards the aforesaid ruling given by the MAAR, it is observed that the activities performed by the Appellant, which is a composite supply having training services as the principal supply as discussed hereinabove, can be aptly classified under the more specific SAC 999294 bearing the description "Other education and training services nowhere else classified", rather than the SAC 999792 bearing the description "Agreeing to do an act". 15. Having held that the impugned activities of the Appellant would be classified under the SAC 999294 bearing the description "Other education and training services nowhere else classified", the next question before us is related to the place of supply of the impugned services. Though, in the earlier cases, this Appellate Authority has refrained from answering the questions related to the determination of "place of supply" as the Appellate Authority was of the opinion the determination of the place of supply....
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....ormance-based service where the said training services are supplied to individuals, such as apprentices, unskilled workers, students of various technical institutes and colleges, who can be said to be representing on behalf of the recipient, i.e., the Principal located in Germany as the Appellant are receiving the consideration/financial assistance for undertaking the aforesaid training services being provided to above-said individuals from their German Principal, therefore, it can unambiguously be said that the above-mentioned individuals whom the Appellant are rendering training services are acting on behalf of the recipient, in this case. the German Principal of the Appellant. Further, these individuals need to be present physically in the training workshop constructed by the Appellant for receiving the training services as the said training classes, inter-alia, involves various classroom teaching and on-job trainings pertaining to different trades and field. Thus, without the physical presence of the individuals in the training workshops owned by the Appellant, it is not viable at all for the Appellant to impart the said technical training. From the foregoing, it is established....