TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 1344
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...., 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 Under the 'develoPPP.de programme', the German Go....
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....s 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 in lieu of the financial assistance received from their German Holding Company would constitute supply of services in terms of Section 7 of the CGST Act, 2017 and the....
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....he 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 activities of the Appellant have already been construed by the MAAR as 'Agreeing to do an act' and the same has been held to be classified under the SAC 999792 and not as any services relating to the event....
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....ING 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 place of supply in terms of Section 13 (3)(b) and Section 13(4) of the IGST Act, 2017; (ii) that the Department/Respondent even at the Appellate level is not sure and therefore has not pointed out any one specific provision in support of their s....
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....tl 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 for training to its regular employees as well; (xi) that the CGST Department has put forth the aforesaid contention regarding the determination of the supply as per the provision laid under Section 13 (4) of the IGST Act, 2017 which was rejected by the MAAR; that since the Department has not challenged the....
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.... 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 cost incurred on the project by the Appellant are beyond mere training to the individuals. (iii) that where the activities carried out by them are only limited to the training to individuals, the MAAR would have classified the same under the SAC 999293 as "commercial training and coaching services". (iv) that the provisions of Section 13 (3)(b) of the IGST Act, 2017....
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....uld 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 'Zero Rated Supply' and qualifies as 'export of service' under the provisions of the IGST Act, 2017 and can be exported without payment of IGST? The Appellant has stated in the grounds of appeal that the appeal is limited to the answer given to question no 4. However, in order to decide whether the activity of the Appellant is an export of service or not, the 'place of supply' of the service has to be decided. ....
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....rvices 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 machineries, tools, equipment, etc., used for providing training to the candidates, providing support to the educational institutions in designing their course contents, in developing their teaching aids and instruction materials like working models, slides, video and work books, in campus development like solar lighting systems, garden development, drinking water facilities and the like, sponsoring course fees, uniforms, canteen and hostel fees, social and cultural activities and the like, payment of stipend to apprenticeship tr....
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....vices 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 consideration in the form of financial assistance from its holding company/Principal. * Construction of a separate 400 sqm training center within a 2,500 sqm production hall, divided into a theory room and a practical training workshop; * Implementation of training measures for trainers, apprentices, unskilled workers and students or college graduates as well as integration of teaching content at four educational institutes; * One-year training of 80 vocational students (20 mechanics and 60 electrical engineers from the Industrial Training ....
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.... 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 was not under the scope of the Advance Ruling, the same was not expressly enumerated in the list of questions prescribed for seeking the Advance Ruling in terms of Section 97(2) of the CGST Act, 2017. However, we are inclined to take up this issue of determination of the place of supply in respect of goods or services or both after the pronouncement of Hon'ble Kerala High Court Order dated 03.02.2020 in the case of Sutherland Mortgage Services Inc. vs. Principal Commissioner of Customs, Central GST and Central Excise, Kochi [2020 (3) TMI 186-Kerala High Court], wherein the Hon'ble High Court during the course of the....
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....ient, 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 beyond doubt that the activities undertaken by the Appellant by way of providing training services to the individuals acting on behalf of their Principal are performance-based services. Since, in this case, the said services are performed at the premises of the Appellant, which is in India, the place of supply of the impugned services will also be in India in terms of Section 13(3)(b) of the IGST Act, 2017, which is being reproduced hereinunder: Section 13(3): The place of supply of the following services shall be the location where the services are actually performed, namely:- (a) ... .... ..... (b) services suppl....