TaxTMI 
TaxTMI 
2022 (6) TMI 1256
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..... Plot C59, Bandra Kurla Complex, Bandra East, Mumbai- 400051, Maharashtra ("hereinafter referred to as "Appellant") against the Advance Ruling No.GST-ARA-35/2019-20/B-14 dated 24.05.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS OF THE CASE 3.1 Dubai Chamber of Commerce & Industry. Dubai (hereinafter referred to as 'DCCI Dubai) is a non-profit organization. Dubai Chamber of Commerce and Industry, Liaison Office, India (hereinafter referred to as 'DCCI LO' or 'the Appellant') is located at 9th floor. Platina, G block, Plot C59, Bandra Kurla Complex. Bandra East, Mumbai- 400051. 3.2 All the commercial organizations registered in mainland Dubai and undertaking businesses in Dubai, by law, must obtain membership of DCCI Dubai. The mission of DCCI Dubai is to represent, support and protect the interests of the business community in Dubai. It does so by creating a favorable environment, promoting Dubai as an international business hub, and by supporting the development of businesses. Thus, DCCI is established and governed by the decree/law of Dubai for development of Dubai's businesses at large....
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.... DCCI-LO office in India shall not undertake any activity of trading, in commercial or industrial nature, nor shall it enter into any business contracts in its own name without prior permission of the RBI; (e) That no commission/fees shall be charged or any other remuneration received/income earned by the office in India for the liaison activities/services rendered by it, or otherwise, in India; (f) That the entire expenses of the office in India will be met exclusively out of the funds received from abroad through normal banking channels; (g) That the office in India shall not borrow or lend any money from/to any person in India without RBI permissions. (h) That the office in India will not render any consultancy or any other services directly/indirectly with or without any consideration; (i) That the office in India shall not acquire, hold, transfer/ dispose any immovable property; (j) That the office in India will not have signing/commitment powers, except than those, which are required for normal functioning of the office on behalf of the Head Office located at Dubai. 3.5 In order to avoid any kind of tax disputes in future and for certainty of position, DCCI LO. i....
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....arashtra Appellate Authority for Advance Ruling (hereinafter referred to as "the MAAAR") on following grounds - 4.1 The Appellant have filed the present Appeal by relying on the recent CBIC Circular No. 157/13/2021-GST dated 20.07.2021 that provides for extension of timelines for filing an appeal to AAAR under GST owing to 2nd wave of COVID pandemic. Relevant para of the circular has been reproduced below; (c) Appeals by taxpayers/ tax authorities against any quasi- judicial order: -Wherever any appeal is required to filed before Joint/ Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where a proceeding for revision or rectification of any order is required to be undertaken, the time line for the same would stand extended as per the Hon'ble Supreme Court's order, 5. In other words, the extension of timelines granted by Hon'ble Supreme Court vide its Order dated 27.04,2021 is applicable in respect of any appeal which is required to be filed before Joint/ Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal a....
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....t is further submitted that DCCI Dubai, being a body regulated by a statute under the UAE law, it performs function of promotion of business and trade relations between India and UAE, through DCCI- LO/Appellant. 4.7 Referring to the Paras 5.10 and 5.11 of the impugned ruling, wherein the MAAR has compared activities of the Appellant as 'auxiliaries to trade', the Appellant have submitted that the dictionary meaning of the word 'auxiliary' is 'providing supplementary or additional help and support'. It has been submitted by the Appellant that it does not provide any direct or indirect help or support in the running of any businesses. Further, the activities of the Appellant cannot be compared to services such as transportation, banking, warehousing etc. as enlisted in Para 5.10 of the impugned ruling; That Appellant is involved in general promotion of trade relations between businesses located in India and UAE; 4.8 The Appellant are prohibited from undertaking any commercial or business activity directly or indirectly in terms of Regulation 2(e) of the Foreign Exchange Management Regulations. 2016 (hereinafter referred to as "FEMR") which governs establishm....
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....ney from/to any person in India without RBI permissions. (f) That the office in India will not render any consultancy or any other services directly/indirectly with or without any consideration; (g) That the office in India shall not acquire, hold, transfer/ dispose any immovable property; (h) That the office in India will not have signing/commitment powers, except than those, which are required for normal functioning of the office on behalf of the Head Office located at Dubai. 4.11 That neither the Appellant nor its Dubai Head office is receiving any sorts of consideration in the form of fee or commission from any company in India for acting as link between that Indian company and Dubai based company; 4.12 That expenses incurred by the Appellant (predominantly office rent, salaries etc.) for the purpose of liaison / representation activity are remitted from DCCI Dubai on a cost-to-cost basis, through normal banking channel: 4.13 Further, referring to Section 2(17)(a) of the CGST which defines the term 'Business', the Appellant have submitted that their activities would not fall under any of the activities mentioned in the said definition of Business which includes....
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....nging or facilitating the supply of goods or services or both, between two or more persons; 4.18 That it is submitted that while the MAAR ruled that Appellant are arranging or facilitating a supply, the impugned ruling fails to identify the underlying supply which the Appellant are apparently arranging/facilitating. It is further submitted that in the present case, there is no such underlying supply of goods or services which the Appellant are facilitating; 4.19 That for a person to qualify as an "intermediary", he should have an active role in arranging or facilitating the actual supply of goods or services. However, in the present case, once businesses connect with each other as a result of promotional activities or introduction or references undertaken by Appellant, the Appellant are neither involved nor concerned with any actual supply which may or may not take place between such businesses. Appellant are not involved in any discussions, negotiations etc. between businesses in respect of any supply, which may or may not undertake between the businesses in India and those in Dubai. It should be noted that Appellant may not even be aware of whether the connected businesses in I....
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....onsultancy firms, etc. located in Dubai; (c) by way of organizing events or interactions for business delegations wherein the Appellant arrange for physical meeting between the business delegations of Dubai and business entities of India and vice-versa for purpose of better understanding of the business landscapes in India and vice-versa. The Appellant have also further submitted that they have organized many seminars, round table discussions and conferences where they have engaged with various businesses in India and shared information about Dubai as a high potential business destination, the regulatory changes or updates being introduced in Dubai, its logistic and financial infrastructure, etc. (d) by way of conducting numerous virtual events in the form of Webinars to discuss India-Dubai business landscapes in specific sectors like Logistics, Retail. Foods & Beverages, etc. (vi) That the funds from DCCI H.O. are received based on expense forecast (cost-to-cost basis) for a quarter. That this arrangement is mainly to ensure the availability of funds at all times and to reduce the administrative burden of bank charges at DCCI H.O.'s end arising from frequent fund transfe....
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....providing this service. (v) As regards the Appellant's contention that DCCI- L.O. is not undertaking any business in India, and hence is not involved in supply of services as per the definition of supply provided under Section 7 of the CGST Act, 2017, the Respondent has submitted that as per Section 2 (17) (a) even if an activity undertaken by a party is not for any pecuniary benefit, it will be treated as business under the CGST Act, 2017. This implies that for an activity to be considered as business it is not mandatory that the same has to be taken up with a motive to earn profit. (vi) As regards the Appellant's contention that they are not receiving any consideration from any businesses in India or Dubai and that they are receiving only the reimbursement of monthly expenses incurred by them on cost-to-cost basis, the Respondent, by referring to the provisions of Section 2(31) which contains the definition of the term "consideration", has submitted that any amount received in the course or furtherance of business will be treated as consideration. (vii) That the Appellant's contention that they are receiving remittance for the expenses incurred on cost-to-cost b....
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....e of M/s. Takko Holding GmbH - [2018 (10) TMI 1315, the Rajasthan AAR Order in the case of Habufa Meubelen B.V. [2018 (7) TMI 883], the Haryana AAR Order in the case of Wilhelm Fricke SE - AAR, Haryana [2021 (1) TMI 690], the Maharashtra AAR Order in the case of the World Economic Forum. India L.O.. along with the CESTAT Mumbai Orders in the case of Lubrizol Advanced Materials India Pvt. Vs. C.C.E., Belapur [2019 (22) G.S.T.L. 355] and Chevron Phillips Chemicals India Pvt. Ltd. Vs. Commissioner of CGST & C.E., Mumbai East. 7.3 By placing reliance on the aforesaid Advance Ruling Orders, the Appellant argued that since Liaison Office and its Head Office, located abroad, are the same legal entity, therefore, any activity undertaken by the Liaison Office at the behest of its overseas Head Office would be construed as service rendered to self, which would be out of the purview of the supply as envisaged under Section 7(1)(a) of the CGST Act, 2017, and hence, not liable to GST. 7.4 By placing reliance on the aforementioned CESTAT Mumbai Judgments, the Appellant contended that they could not be held as an "intermediary" in terms of Section 2(13) of the IGST Act, 2017 as they were not ar....
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.... by the Indian businesses, which would be a consideration in itself charged from the Indian companies, the Appellant vide their aforesaid written submissions dated 09.03.2022 replied that as per the RBI guidelines, the DCCI L.O. cannot collect any fee from anyone in India. They further submitted that the membership fee collected by M/s. DCCI, H.O. from any Indian entity intending to set up its unit in Dubai was for the services to be provided by DCCI, H.O. to that very Indian entity. However, in such cases, the liability to discharge GST on the said membership fee. if any, would be on the Indian businesses on the reverse charge basis in accordance with the provisions of section 5(3) of the IGST Act, 2017, and not on the Appellant as the said membership services were being provided by the Dubai H.O. to the Indian businesses. DISCUSSIONS AND FINDINGS 8. We have carefully gone through the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with all the additional submissions made by the Appellant during the course of the personal hearing proceedings. We have also examined the impugned Advance Ruling passed by the MAAR, wherein it has been held t....
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....upply of goods or services or both, or securities, between two or more persons; (c) He should not supply such goods or services or both or securities on his own account; Now, on application of the aforesaid pre-requisites in the facts of the case, it is noticed as under: (i) That the Appellant can be construed as an agent of their Head Office located in Dubai for the reason that they are undertaking the impugned activities at the behest of their Head Office wherein they participate and represent in various seminars, conferences, trade fairs, or exhibitions, in the capacity of a representative of their Dubai Head Office for attaining the purpose and objectives of their Principal, i.e.. their Dubai Head Office. Further, they also undertake organizing of various events, interaction programmes for providing platforms where the business entities of India get the information/details about the potential business partners of Dubai with whom they can collaborate to expand their businesses in Dubai along with other information which include updates in business regulation, policy framework, being introduced in Dubai for the foreign trade or investments. As all the aforesaid activities ar....
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....nt are considered as "services" as per the definition provided under section 2(102) of the CGST Act, 2017, 2(102) "services" means anything other than goods, money and securities hut includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; The said definition has very wide connotation attributable to the expression "anything other than goods, money and securities" under the GST law. Now, we proceed to discuss the nature of the services provided by the Appellant at the behest of their Dubai Head Office. On perusal of the activities undertaken by the Appellant, it is noticed that the Appellant are undertaking a bunch of activities, which are enumerated hereinunder: a) By way of making introduction and references to the business entities in India who are seeking any distribution partners for their goods or services in Dubai and vice-versa by sharing the contact details from the database maintained by them for setting up the initial meetings between the businesses in India and the businesses in Dubai; b) By way ....
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....ately. 14. Now, on perusal of the activities of the Appellant mentioned at para 12 above, it is conspicuous that the Appellant, inter-alia, are organizing various seminars, conferences, other interactive events for Indian Business entities and Dubai Business entities/ delegates for the better understanding of the business landscapes in India and Dubai, and for promoting and projecting Dubai as an international business hub as a part of the diplomatic mission of their Dubai Head Office. Thus, such activities of the Appellant can be grouped under the category of "support services" having the Service Accounting Code "998596" which has the description as "Events, exhibitions, conventions and trade shows organization and assistance services ". Further, the other activities of the Appellant such as sharing information with their Dubai Head Office about the regulation updates, policy framework, business trends, potential areas of business in India and activities like participation in the various seminars, conferences, trade fairs, exhibitions, etc. as a representative of the DCCI H.O. for promoting Dubai as an attractive international business hub, and for attracting foreign investors in....
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....ces supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organization, shall be the place where the event is actually held." Since, the Appellant are, inter-alia, undertaking numerous activities pertaining to the organization of the various events in the nature of seminars, conference, round table discussions, etc., the place of supply in such cases will be the place where such events have been held. As it is evident that the Appellant are organizing such events in India, the place of supply of such services, provided by the Appellant, will be in India, i.e., in the taxable territory. 17. It is worth mentioning here that some components of the Appellant's supply of services are not in the nature of organization of events, such as those pertaining to the activities of participation in the various seminars, conferences, trade fair, exhibitions, reporting regulatory changes, potential areas of growth, business policies etc., on behalf of the Dubai Head Office, for promoting Dubai as interna....
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....amount received from Dubai Head Office. DCCI-H.O. 19. Thus, on the basis the above discussions, it is concluded that the Appellant are required to obtain GST registration, and pay IGST on the entire amount received from their Dubai Head Office for providing the said mixed supply of support services. 20. The Appellant, vide their submissions made in the grounds of appeal, have contended that DCCI is a non-profit organization setup by the law in Dubai, and is intended to safeguard and promote the interests of businesses in Dubai. They have further submitted that all the business entities based in Dubai have to mandatorily take the membership of DCCI in order to carry out their businesses in Dubai against the prescribed membership fee to be paid to DCCI. They have further submitted that DCCI Liaison Office has been setup as a part of diplomatic relationship between India and Dubai to promote the trade and economic relationship between the two countries in pursuance to the meetings held between the Heads of the two countries, i.e., Hon'ble Prime Minister of India and the Hon'ble President of U.A.E. They have also submitted that the DCCI-L.O., like its Dubai H.O., is also a no....
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....hey are not charging any fee or commission from Indian or Dubai businesses for undertaking their liaisoning activities, and hence, are not engaged in any supply owing to the absence of consideration in the present case, and thereby, their activities will not come under the ambit of supply as provided under Section 7(1)(a) of the CGST Act, 2017, which mandates the presence of consideration for a transaction to qualify as "supply". In this regard, it is stated that though they are not charging any fee or commission from the Indian and Dubai business entities, they are definitely receiving an amount in the form of monthly reimbursement of expenses (cost- to- cost basis) from their Dubai Head Office, which will definitely be construed as "consideration" in terms of its definition provided under Section 2(31) of the CGST Act, 2017, which reads as under: "2. In this Act, unless the context otherwise requires, - (31) "consideration" in relation to the supply of goods or services or both includes-- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipien....
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....ctivity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; 23. It is also germane to mention that the aforesaid definition of the term "business" also includes the activities which are not done for pecuniary benefit. Hence, the....
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....tutory obligations in India, viz.- filing of Annual Income Tax Returns with the Income Tax Authorities, filing of Annual Financial Statements with the Registrar of the Companies under the Indian Companies laws, etc., can definitely be considered as an artificial juridical person. Thus, it is seen that DCCI-H.O. and DCCI-L.O./Appellant are two different persons as per the GST law, and thereby, the activities undertaken by the Appellant at the behest of their Dubai Head Office will clearly constitute supply in terms of Section 7(1)(a) of the CGST Act. 2017 as all the prerequisites of the supply provided under Section 7(1)(a) of the CGST Act, 2017 are being satisfied by the activities undertaken by the Appellant at the behest of their Dubai Head Office. 27. The Appellant, to strengthen their contentions, have referred to the below mentioned Advance Ruling Orders: i. M/s. Wilhelm Fricke SE - AAR, Haryana [2021 (1) TMI 690]; ii. Habufa Meubelen B.V. - AAR, Rajasthan [2018 (7) TMI 883]; iii. M/s. Takko Holding GmbH - - AAR, Tamil Nadu [2018 (10) TMI 1315; iv. M/S. Fraunhofer-Gesellschaftzurforderung Der Angewandtenforschunge -Appellate AAR, Karnataka [2021 (2) TMI 1164]: In thi....