2022 (5) TMI 964

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....e US Securities Act, 1933 it is impermissible for an issuer to issue or offer for sale any security unless the security is registered with the U.S. Securities Exchange Commission (SEC), except in respect of securities being offered in terms of Regulation S (for sale outside US jurisdiction) or on a private placement basis. Further, it is submitted that Rule 144A of the US Securities Act, 1933 provides that resale of securities to Qualified Institutional Buyers (QIBs), which have been privately placed in the USA, would be permissible without such security being registered with the SEC. Since the registration of a security with the SEC is a cumbersome process, virtually most of the issues are made under Rule 144A, where the entity with whom the private placement is made, (i.e. the Manager of the issue), technically purchases the Notes and simultaneously resells the same to the actual investors to the issue. 3. AGEL submitted that it identifies the Managers, whose role is to solicit and get the requisite subscribers to the issue. An informal understanding is arrived at between the issuer and the Managers, wherein it is agreed that only when the Managers have secured the requisite n....

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....tration that the Subscription Agreement stipulates that the Managers have also agreed to subscribe and pay for the Notes for the amounts set out in Schedule 4 to the Agreement. The aforesaid activity at times, is loosely referred to by the Managers as Underwriting or at times, as Initial Purchase. A redacted version of one of the subscription agreements where the expression 'initial purchase' has been used as against 'underwriting' is attached herewith as Exhibit B. 7. AGEL submitted that the expression Underwriting under the US Securities Act, 1933 has a different colloquial meaning as compared to that commonly understood under the Indian laws, where underwriting is primarily an activity wherein the bankers/managers agree to themselves subscribe to the security, in the event of not receiving subscription for the entire issue. However, under the US laws, the expression underwriting is understood to mean the purchasing of securities for reselling. 8. AGEL submits that in terms of clause 11 of the Subscription Agreement, a fee, as mutually agreed, is to be paid to the Managers. Accordingly, Fee Letter dated 28th September, 2021 has been executed by the Applicant with each Manag....

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.... provides for the determination of inter-state supplies. Sub-section (4) thereof provides that supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce. 12. The term import of services is defined in section 2(11) of the IGST Act as: "(11) "import of services" means the supply of any service, where- (i) the supplier of service is located outside India; (ii) the recipient of service is located in India; and (iii) the place of supply of service is in India;" 13. Section 13 of the IGST Act applies for determining the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. The expression 'location of the supplier of services' has been defined in Section 2(15) to inter-alia mean the location or usual place of residence of the supplier. The expression usual place of residence has been defined in Section 2(113) to mean the place where the person is incorporated or otherwise legally constituted. The Managers in question have all been incorporated or legally constituted outside Ind....

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....ubmission. Revenue's Submission 21. Revenue has neither submitted its comments nor appeared for hearing. Findings: 22. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 23. The issue before us hinges whether the Manager is an intermediary. 24. We have carefully studied the submissions before us and find the following facts emerging: i. Manager arranges & facilitates coordination between the AGEL who issues the Notes and the (potential) Investors subscribing to the Notes. Manager solicits and arranges investors for subscribing to Notes issued by AEG. ii. Manager initiates the process of book building by informing potential investors about the coupon rate at which the AGEL intends to offer the Notes. For this, Managers undertake a gamut of activities viz. a. scheduling meetings/ liasoning between the AEG and the investors, b. arrange road-shows for prospective invest....