TaxTMI 
TaxTMI 
2022 (12) TMI 507
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....ithout underlying import of service will be liable for payment of Integrated Goods and Service Tax under reverse charge mechanism under entry no. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT Background of the Applicant: 2.1 IVL Sweden is a foreign company incorporated under the laws of Sweden and IVL India Environmental R&D Pvt Ltd. ('IVL India'/'The Applicant') is a company incorporated under the laws of India. 2.2 The Municipal Corporation of Greater Mumbai ("MCGM") had invited bids for contract of "Project Management Consultancy Services" for four locations which are Versova and Malad Influent Pumping Station under MSDP Stage -....
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.... contract. • Detailed designs submitted by the contractors after award shall be checked & vetted by PMC. • Review designs, drawings, item provisions & specification with respect to actual site conditions & suggest modifications, if required or deemed appropriate. If any realignment, redesign/modification, any additional design for completion of the project is required, it will be done by the Contractor under the guidance of PMC. • PMC shall also review, vet and approve the construction, health and safety Programmes submitted by the contractor. • Scrutinize the contractor's detailed work program, suggest modifications, if any, to the program after a careful study and ensure the contractor complies with the program; and the same shall be vetted and approved by PMC. • Scrutinize and/or review contractor's superintendence, personnel and suggest modifications, if any; • Scrutinize mobilization of the Contractor's Equipment to ensure the nominated plant & equipment is delivered to the site in accordance with the contractor's program and that permits where necessary, are obtained in a timely mann....
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....t, machinery, installations, etc. & ensure they are adequate & are in accordance with the terms and conditions of the contract; - During construction stage detailed designs of the project components will be prepared by the Contractor and submitted to the PMCs for approval, check & vetting for GFC Certification. The robust design shall be in line with the Employer's Requirement. The construction will commence only on the receipt of "Good for Construction" certificate from the PMC. • Review all concrete mix designs proposed by the contractors & approve/ suggest modifications, if any; in the mix design, laying methods, sampling, testing procedure, & quality control measures, to ensure required standard and consistency in quality during the commencement of work; • Supervision and Contract Management (On Civil, Mechanical/ Electrical/ Instrumentation work etc.) including techno legal advice in connection with the work. • Monitor closely and regularly the progress of work and advice the contractor about corrective measures and advise the client on progress of work at site on monthly basis. • Maintain a day-to-day diary recording all....
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....iances of Environmental Requirements as per MPCB/CPCB/Environmental Standards; ensure that the contractor implements the EMP; • Operate a quantitative and qualitative project performance monitoring system (PPMS) as per the plan to be monitored and to evaluate the performance of the project in relation to its goals, purposes and outputs; • Any cost for obtaining all environmental clearances, NOCs / approvals from State and Central Government Authorities and any other clearances that may be required by law during construction, execution and DLP shall be the responsibility of the contractor and the PMC shall assist the contractor for the same. • Study of environmental clearance obtained by the Employer. If any impact is foreseen, guide the Employer in resolving the same. • To assist the Contractor during the installation & commissioning which includes pre commissioning tests, Site Acceptance tests or any other tests required as per the Conditions of the Contract. All the tests are to be got approved by the PMC before commencement; • Prepare, review, approve and recommend the Acceptance Certificates/ Completion Certificat....
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....its meaning and interpretation, and the relation between the Parties shall be governed by the Applicable Indian Law. Office for Consultant MCGM will provide, office admeasuring 200 sq. feet at Mithi River Package I site. Electricity charges shall be borne by the Consultant and water will be provided by M.C.G.M. free of cost. This office will be available during project management consultancy and O&M period of the contract. During pre-PMC period, consultant has to make their own arrangement of space either in Thane, Mumbai or Navi-Mumbai region. Daily attendance report of key-staff shall be submitted along with the monthly bills. Man-days spent by each non-key staff shall be submitted monthly. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS Relevant Legal Provisions and Notifications: In order to elucidate the levy of GST upon the instant transaction, reference shall be drawn to relevant statutory provision(s) and notification(s). Relevant portions/extracts of such provision(s) and notification(s) have been reproduced here under for ready reference: 1. The levy of tax under the GST regime comes fr....
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....r section 6 of the IGST Act, and includes non-taxable supply". B. Statement Containing Applicant's interpretation of law and/or facts, as the case may be, in respect of the questions(s): 1. The Applicant's interpretation of law with respect to questions raised above is as under: 2. In the instant case, IVL India is incorporated for the sake of satisfying the condition of MCGM. Further, IVL India does not receive any services from IVL Sweden and the activities undertaken by the IVL Sweden satisfy all of the aforesaid conditions as explained below:- • IVL India was incorporated in India merely for the purpose of obtaining the contract from MCGM. • IVL India does not have necessary expertise to provide the 'Project Management Service' on its own capacity. • The aforesaid contract is awarded to IVL India, on the basis of credentials/expertise of the Parent Company. Thereby, as mandated by MCGM, both IVL India and the IVL Sweden have jointly signed the contract with MCGM. 3. Therefore, it is evident that IVL India is not receiving any services from IVL Sweden. IVL Sweden is providing services to the ult....
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....be used since the ultimate service provider and the ultimate beneficiary of the project is the foreign company itself, in the instant case, IVL Sweden. Further the contract has been signed by both parent as well as wholly owned subsidiary of the parent with MCGM i.e., the contract is a tri-partied contract. b. Payment in INR only: Since the Payment terms of the Contract has clearly mentioned that the 'currency of payment shall be Indian Rupees only', IVL Sweden had to incorporate IVL India in order to raise invoices in INR and receive the payments against the same in INR to be further remitted to IVL Sweden since majority of the work has to be done by IVL Sweden only. c. Import License: In the contract (clause 35), it is categorically mentioned that if any goods are required to be imported for smooth execution of the project, then IVL Sweden shall be solely responsible to import those goods, which is impossible for IVL Sweden since Import export license/code is only issued to Indian residents or establishments those are registered in India. Hence, IVL Sweden had to incorporate the Indian entity to mitigate the risk of delays if a....
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....all the work shall be executed by it, refer annexed LoA's. This means that the actual consultant to this contract is IVL Sweden. Hence, the benefit of the exemption notification shall reach to IVL Sweden. b) Specific requirement of incorporation of an Indian entity in the LoA: In the Letter of Award, MCGM has specifically made it mandatory for IVL Sweden to incorporate a company under the Indian Companies act along with PAN, GST registration and other statutory details. Refer the requirement list in the annexed LoAs in Appendix II. c) Credentials and work experience of IVL Sweden: The bidding criteria in the bidding documents specifically mentions certain minimum criteria without which, the contract shall not be awarded. Below are the relevant clauses of the contract. The contract to IVL Sweden has been awarded solely on the basis of the credentials and work experience of IVL Sweden. This further reiterates the fact that the main consultant of this contract is IVL Sweden & not IVL India. Hence, the benefit of the exemption notification should also reach to IVL India. d) BG by IVL Sweden: As per the....
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....ference: "5. On the second issue regarding services provided for use by the international organization UNICEF, we note the lower authorities denied the exemption under Notification 16/2002-ST on the ground that the services were provided by the appellant to M/s Lintas India (P) Ltd. and not to UNICEF. Notification 16/2002-ST exempts all taxable services provided by any person to the United Nations or an international organization as declared by the Government. UNICEF is covered by the exemption notification. I/we have perused various bills raised by the appellant to receive the consideration for such services. Though the bills were raised in the name of M/s Lintas India (P) Ltd., the nature of service is clearly mentioned as charges towards branding cost of three UNICEF Van, UNICEF Girl Star activities, cost of UNICEF Float Operational for 30 days, branding of Van for UNICEF. A perusal of these bills make it clear that the services are for UNICEF though the bill is raised through M/s Lintas India (P) Ltd. We find in such situation, denial of exemption under Notification 16/2002-ST will not be sustainable. Accordingly, the claim of the appellant is accepted for such exempti....
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....so come in the purview of exempted or 0%. Thus I observe that if the principal contractor is providing an exempt works contract service to Government in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and in such case if works contract is partially or wholly sub-contracted then the sub-contractors would also be exempted from payment of GST" e) The authority for advance rulings Maharashtra in the case of M/S. HITACHI POWER EUROPE GMBH - 2020 (7) TMI 79 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA has held that 5.6 The Project Office has its own employees and also some employees of the Head Office (Expat employees) who work in the Project Office in India, for whom all the employer's obligation like Form 16 in accordance with Section 203 of the Income Tax Act,1961 are done by the Project Office. 5.7 As per the provisions of the Companies Act, 2013, applicant is required to maintain its financial books of accounts in a manner which would reflect a true any fair view of the business of the Company in India. Thus, in order to keep record of the expenses of salary cost of Expat employees working from India,....
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.... PER THE CONCERNED OFFICER: The jurisdictional officer has not made any submissions in the matter. 04. HEARING 4.1 Preliminary e-hearing in the matter was held and the Authorized representative of the Applicant, Shri. Badrinath N.R. (Advocate) and Rupali Deshmukh (Company Representative) ware present. The concerned jurisdictional officer was absent. The Authorized representative made oral submission with respect to admission of their application. 4.2 The application was admitted and called for final e-hearing on 20.10.2022. The Authorized representative of the applicant, Shri. Balaji Grandhi, Learned Advocate and Shri. Varun Garg, Senior executive were present. The Jurisdictional officer was absent. Matter was heard. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file and gone through the facts of the case and the submissions, both written and oral, made by the applicant. 5.2.1 The applicant, M/s IVL India Environmental R&D Pvt Ltd., has submitted that it is a company incorporated under the laws of India and is also a wholly owned subsidiary of a foreign company incorporated under the laws of Sweden, namely, IVL Swedish Environmental Research....
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....as submitted that it was eligible to quote for the tender/contract. However in para 8 of its submissions, the applicant has submitted that only the Wholly owned subsidiaries of the foreign company are eligible to execute for this project and the foreign company in its capacity can bid and execute this project through an Indian entity. Hence, LOA has been issued in the name of the foreign company. There is a contradiction in the submissions made in as much as in para 2D it has been submitted that the applicant was eligible to quote for the tender/contract on the basis of the credentials of IVL Sweden whereas in para 8 a it has been made clear that it was IVL Sweden which has bid for the project and the applicant, as a wholly owned subsidiary, was only supposed to execute the project. We, therefore, observe that the IVL Sweden qualified for the tender/contract and was to execute the project through the applicant. Thus the applicant would execute the project only on the credentials and expertise of the IVL Sweden which would further imply that, without the transfer of the expertise by IVL to Sweden, the contract could not be performed. The application is silent as to how such ex....
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....rogress of work ; maintain a day-to-day diary recording all events related to the works; assist the Contractor for Coordination with various departments of the corporation, other Government Agencies; Advise & recommend on variation, extra/excess items to Employer on regular basis ; Scrutinize and approve contractor's proposal for temporary work, if any ; assist the Employer for getting statutory permissions/clearances; etc. 5.8 Thus, from the submissions made by the applicant it is crystal clear that, the applicant is the one which is performing the service at the ground level and the entire support for such service is being provided by IVL Sweden who has obtained the contract on the basis of its own credentials and work experience and it is a fact that the applicant cannot provide the services under the contract without receiving support services from IVL Sweden. 5.9 In view of the above, we find that services are received by the applicant from IVL to further perform its services under the contract, for which monetary proceeds flow from the applicant to IVL Sweden. 5.10.1 As per Section 2(11) of the Integrated Goods and Service Tax Act, 2017, "Import of services" mean....