TaxTMI 
TaxTMI 
2022 (6) TMI 1256
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....aison Office, 9 floor. Platina, G block. 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 d....
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....ween India office and Dubai office; (b) That except the proposed liaison work, the 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 ....
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....tended by the Jurisdictional Officer, and therefore, the Appellant cannot be treated as a non-profit organization. GROUNDS OF APPEAL 4. The Appellant have filed their appeal dt 23.07.2021 against the MAAR's Order dt 24.05.2021 before the Maharashtra 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 ....
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....ies it will not get qualified under the definition of "intermediary'' provided under the GST law. If that logic is to be applied then Government's initiatives of promoting business would also get covered under the "intermediary'", which would be absurd: That, it 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 businesse....
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....ny other remuneration received/income earned by the office in India for the liaison activities/services rendered by it. or otherwise, in India: (d) That the entire expenses of the office in India will be met exclusively out of the funds received from abroad through normal banking channels; (e) That the office in India shall not borrow or lend any money 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.....
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....s & interactions with Indian stakeholders for sharing information about Dubai. Thus, by no stretch of imagination, can it be said that the Appellant are carrying out the business of supply or receipt of goods or services or both on behalf of any other person, for it to qualify as an agent. Further, its activity of connecting businesses in India with business partners in Dubai can by no stretch of imagination be equated with arranging 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 underta....
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....d 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 of introducing Indian business firms, who seek the guidance for setting up of businesses in Dubai, with the professional services firms, such legal firms, business consultancy 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,....
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.... which is nothing but kind of activity undertaken and covered under GST and liable for the Tax, as a part of definition of business. "Connecting Business'* has a vast/broader meaning and includes facilitating and supply of goods or services. The purpose of opening Liaison Office is to increase the business between two countries by removing any difficulties faced by the trade. So, in short, indirectly it is in the course or furtherance of business only and whatever additional amount is received by DCCI-LO is consideration received for 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 content....
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....e not liable to GST. During the said second personal hearing, the Appellant's Representative Shri Patwari also sought to file the synopsis of the entire submissions made by them before this Appellate Authority. 7.2 Consequent to the aforesaid personal hearing proceedings, the Appellant filed a written submissions dated 09.03.2022, wherein they once again referred to various Advance Ruling Orders, such as the Karnataka AAAR Order in the case of Fraunhofer-Geseuschaftzurforderung Der Angewandtenforschunge [2021(2) TMI 1164], the Tamil Nadu AAR Order in the case 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 L....
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....he Head Office, were also utilized only for the purposes of expenses of L.O.. and that the same were not attributable to profits. As such, the Appellant argued that since the said remittances were being received from their Dubai H.O. on cost-to-cost basis to sustain their operations in India, the same could not be construed as consideration for providing services to their Dubai H.O. 7.7 Replying to the query raised in the personal hearing with regard to the membership fee paid by the Indian businesses to the DCCI, Dubai Head Office in the case of setting up of Dubai units 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 th....
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....y" 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;" 11. On perusal of the aforesaid definition of "intermediary", it is seen that for any person to be covered under the ambit of an intermediary, he is required to fulfill the following criteria: (a) He should be a broker, an agent or any other person, by whatever name called; (b) He should arrange or facilitate the supply 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....
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....ecipient provided under Section 2(93) of the CGST Act, 2017. However as the Appellant are receiving consideration from their Dubai Head Office only, and not from any business entities of either India or Dubai, thereby, making their Dubai Head Office as the sole recipient of their service. Thus, on basis the aforesaid observations, it can be safely concluded that the Appellant are not acting as an '"intermediary". 12. Now, having concluded that the Appellant are not "intermediary", we set out to discuss the activities undertaken by the Appellant at behest of their Dubai Head Office. It is not disputed that activities undertaken by the Appellant 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 an....
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....ame is being reproduced hereinunder for the sake of reference: "2. In this Act, unless the context otherwise requires,- (74) "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply; Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. 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....
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.... without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II" 16. Now, we set out to determine the third moot issue as to whether the place of Supply of the impugned activities is within taxable territory, or otherwise. Since, the recipient of the services is located in Dubai, i.e., outside India, in order to determine this issue, we will refer to the provisions made under Section 13 of the 1GST Act, 2017 which determines the place of supply of services where location of supplier or location of recipient is outside India. Under this Section, we will refer to the sub-section (5), which is being reproduced hereinunder:, "Section 13. (5) The place of supply of services 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 th....
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....o be the supply of the event-based support services grouped under the SAC 998596. which attracts GST at the rate of 18 %. Clause (b) of Section 8 of the CGST Act, 2017, is reproduced hereinunder: (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. As the event-based support services, which are grouped under the SAC 998596, attract IGST at the rate of 18%, i.e., the highest rate of tax among all the elements of the bunch of services provided by the Appellant to their Dubai Head Office, the host of services provided by the Appellant will be deemed to be supply of this specific event-based support service classified under SAC 998596, and accordingly, the Appellant will be liable to pay IGST on the entire 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, hav....
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....use a body or an entity is setup under the law to attain some specific objectives, that body or entity does not get exemption from payment of GST under the GST law unless such body or entity is specifically exempted from GST on the supply of goods or services or both, made by it, by way of an entry in the exemption notification. It is further opined that the Foreign Exchange Management Act and the GST Act are entirely different Acts having their own objectives and purposes. There is no correlation between these two laws. Therefore, the definitions and meanings assigned to the term "business" in these two Acts are completely different. Hence, any activity which is not business as per the mandate of R.B.I. can be construed as a business under the GST Law. Further, it has also been contended by the Appellant that they 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....
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....cation which as per the "Merriam Webster Dictionary" means "the special function of an individual or group". Since, the Appellant are also undertaking specific functions assigned by their Dubai Head Office, their activities can aptly be construed as "vocation". The said term "vocation" finds its mention among the set of terms included in the definition of the term "business", and thereby, the said bunch of activities undertaken by the Appellant will be construed as "business" in terms of its definition provided under Section 2(17) of the CGST Act, 2017, which reads as under: "2. In this Act, unless the context otherwise requires,- ...................... (17) "business" includes-- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity 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 includin....
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....y body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860 (21 of 1860); (m) trust; and (n) every artificial juridical person, not falling within any of the above; 26. On perusal of the above definition of the term "person", it is seen "that anybody corporate incorporated by or under the laws of a country outside India" is a person. This means that as per the CGST Act, 2017, DCCI-H.O. is a person as it has been incorporated under the laws of a country outside India. Further, from the same definition of "person", reproduced above, it is also manifest that "every artificial juridical person, not falling within any of the above" is also a person. This leads us to conclude that DCCI-L.O., i.e., the Appellant, who is also bound to comply with various statutory obligations in India, viz.- filing of Annual Income Tax Returns with the Income Tax Authorities, filing of Annual Financial Statements....