TaxTMI 
TaxTMI 
2023 (6) TMI 775
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....t') by M/s. IVL India Environmental R&D Private Limited having Address at A808 and 809. Shelton Sapphire. Sector 15 and CBD Belapur, Navi Mumbai, Maharashtra- 400614 (hereinafter referred to as 'the Appellant') against the advance Ruling No. GST-ARA-50 2020-21 B-108 dated 01.12.2022. BRIEF FACTS 3. JVL India Environmental R&D Private Limited ('IVL India' or The Appellant') is a company incorporated under the laws of India and is a wholly owned subsidiary of IVL Swedish Environmental Research Institute Limited ('IVL Sweden') a foreign company incorporated under the laws of Sweden. The Municipal Corporation of Greater Mumbai ('MCGM') is the governing civic body of Mumbai under the Bombay Municipal Corporation Act, 1888. 4. IVL Sweden applied for the bid for all the projects invited by MCGM for the contract of "Project Management Consultancy Services" for four locations which are Versova and Malad Influent Pumping Station under MSDP Stage -II, Mithi River Rejuvenation Project (Package I, II, III & IV), Bandra WWTP under MSDP Stage - II, Worli WWTF under MSDP Stage - II on the basis of their credentials, work experience and various certifications re....
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....by the IVL India Environmental R & D Pvt Ltd thereinafter referred to as the Applicant' or "IVL India") to IVL Swedish Environmental Research Institute Limited (hereinafter referred to as "IVL Sweden"), without 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. 10. The learned Authority for Advance Ruling (hereinafter referred to as "LAAR") had called for a personal hearing and the authorized representatives of the Appellant attended the personal hearing on various occasions and explained the matter in detail. 11. On scrutiny of the documents, the LAAR has pronounced the Advance Ruling vide order No. GST-ARA-50/2020-21/B-108 dated 01.12.2022 received by the Appellant on 07.12.2022 as follows: In reference to Question above, the LAAR has concluded that the transfer of monetary proceeds by the Applicant to IVL Sweden 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. 12. Aggrieved by the said order of t....
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....rson who has the expertise to provide 'Project Management Service' is IVL Sweden and IVL India was acting as a conduit between IVL Sweden and MCGM for the limited purpose of invoicing and receiving the payments. 16.5 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 Sweden has the necessary expertise to provide the 'Project Management Service' in its own capacity. • The Letter of Acceptance is awarded to IVL Sweden on his own credentials/expertise. Also, as mandated by MCGM. both IVL India and IVL Sweden have jointly signed the contract with MCGM. 16.6 Therefore, it is evident that IVL India is not receiving any services from IVL Sweden. IVL Sweden is providing services to the ultimate recipient i.e. MCGM. 16.7 Hence, in the absence of the underlying service being provided by IVL Sweden to IVL India - • The question of payin....
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....en: As per the clause number 8 "Mode of Payment" of the bidding documents, the bidder is required to submit an advance bank guarantee of 10% to claim the advance payment. IVL Sweden furnished/submitted the advance bank guarantee to MCGM in order to fulfil the requirement and claim the advance payment. The ultimate responsibility of the performance of this contract shall remain with IVL Sweden. This also construes that the main consultant to this contract is IVL Sweden. e) Work to be performed by IVL Sweden: The project has been granted on the credentials, work experience and various certifications from different organizations of IVL Sweden and hence, ultimate execution also lies with IVL Sweden, either by IVL India or by executing the part of contract itself. Hence, the above fact means that the main consultant to this contract is IVL Sweden. f) Ultimate beneficiary is IVL Sweden: The entire obligation of the contract performance of the contract and responsibility of the contract lies with IVL Sweden which means that the ultimate beneficiary of the contract and the primary consultant to MCGM is IVL Sweden. It is just to meet the obligati....
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....roleum industry and hence it can be said that, there is no service inter se and hence not liable to GST. 19. The Project Management Services provided to MCGM is wholly exempt under Serial No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, such exemption should be extended to all consultants to the contract: 19.1 The Appellant submits that, the project management services supplied to the MCGM is wholly exempt under serial No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Here, it is important to note that the ultimate services provided to recipient (MCGM) is exempt. Given that MCGM is a local authority and the subject services (being project management services which are wholly and purely services) fall within Article 243G of the Constitution of India and the same is wholly exempt from GST. 19.2 The Learned Authority of Advance Ruling (LAAR) has wrongly observed that there is transfer of expertise from IVL Sweden to IVL India in order to execute the contract and thereby concluding that there is supply of service or goods or both, between IVL Sweden and IVL India. The LAAR has drawn a contrary inference where it states that IVL In....
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....ry No. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017 on the amount paid to IVL Sweden against the receipt of support services in the form of consultancy. 23. The main contentions put forth by the Appellant in their favour are as under: 23.1 That the tender for the project management consultancy of the projects under question was awarded to IVL Sweden by MCGM on the basis of their credentials, work experience, and various certification received from different government organisation: 23.2 That the Letter of Acceptance was also issued by MCGM in the favour of IVL Sweden; 23.3 However, the contract for the said PMC services to be provided to MCGM have been signed jointly by the Appellant, i.e., IVL India, IVL Sweden and the recipient MCGM as per the mandatory requirement of the bidding eligibility criteria documents issued by MCGM in respect of the subject projects which stipulates that the contract can only be executed by the wholly owned subsidiary of the foreign entity who has been awarded the tender under consideration. 23.4 That in compliance to the aforesaid condition, IVL India was incorporated by IVL Sweden under the Indian laws for the purpose of ....
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....nt Consultancy) used for the Appellant in Parent company Guarantee/undertaking. 26. Further, it is observed that though as per the Agreement entered by the Appellant and IVL Sweden with MCGM, and the Parent company Guarantee/undertaking entered with MCGM. the Appellant has been appointed as the PMC (Project Management Consultant) while IVL Sweden as the Guarantor for the completion of the subject projects, there is no doubt about the fact that the entire project management work is carried out by the Appellant with the help of IVL Sweden which has got all the expertise, work experience and resources to manage such projects. In other words, it can be said that without the services of IVL Sweden, it would not have been possible for the Appellant to bag the contract from MCGM to carry out project management consultancy work of such measures. In fact, the contract has been awarded to the Appellant based on the credentials and work experience of IVL Sweden. The aforesaid observations are also supported by the Appellant' contentions wherein it has been contended that all the responsibility of the performance of the work lie with IVL Sweden as IVL Sweden have got all the expertise and w....