TaxTMI 
TaxTMI 
2024 (8) TMI 943
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.... the petitioner. 3. In order to complete the work at Republic of Maldives (Maldives), the NBCCL set up an office and in turn the petitioner also set up their office at Addu city, Maldives. The Authorized Dealer Bank {Oriental Bank of Commerce (OBC)}, which is acting on behalf of Reserve Bank of India approved the establishment of branch office of petitioner in Maldives. 4. The stand of the petitioner is that it exported various goods to its Maldives office. The turnover of such goods was declared under the GST as 'zero rate supplies'. The petitioner treated the consideration received towards 'works contract service of construction' which was completely executed in the territory of Maldives through their Maldives establishment as outside the scope of GST laws of India. Respondent No.2 did not pay GST on the construction to the petitioner and also opined that supplies rendered outside India are beyond the purview of GST. 5. Learned counsel for the petitioner placed reliance on agreement dated 08.07.2016 (Annexure P-5) to show that NBCCL has awarded contract to the petitioner for setting up of the Institute of Security and Law Enforcement Studies (ISLES) at Addu city, Maldives. Cla....
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....and clause 18.2 of this contract makes it clear that taxes, duties and levies shall be reimbursed by NBCCL to the contractor/petitioner. 8. Learned counsel for the petitioner submits that the construction of ISLES was completed and the same was inaugurated in the presence of high dignitaries of India and Maldives. Photographs of the event are placed on record with the counter of respondent No.2. It is submitted that when contract was entered into between GoI and Government of Maldives and work started, service tax regime was holding the field. The GST law came into force with effect from 01.07.2017. 9. In furtherance of the petitioner's letters dated 04.07.2017 and 22.08.2017, NBCCL wrote a letter dated 13.04.2018 to the petitioner which was filed with the counter of respondent No.3. Learned counsel for the petitioner, by taking this Court to this letter, submits that NBCCL obtained a legal opinion wherein it was opined that the ISLES project executed in Addu city of Maldives is neither taxable under the Service Tax regime before 01.07.2017 nor thereafter under the GST regime. Hence, no amount of GST is to be reimbursed to the contractor/petitioner. However, it was opined in the ....
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....suming that the petitioner is covered under the GST law of India and he is required to pay tax based on it, in view of terms of contracts dated 11.03.2015 and another filed with the rejoinder, the tax amount is required to be reimbursed by the GoI to NBCCL and in turn by NBCCL to the petitioner. Thus, it is an arrangement because of which money will go from one pocket to another pocket of the Government. The petitioner cannot be made to suffer and pay the tax under the GST law of India for the activity carried out in the Maldives. 14. It is further submitted that the petitioner has already paid taxes under the GST law of Maldives. The object behind bringing GST and IGST Acts is to levy tax for the activity which takes place within the territory of India and not outside the territory of India. Lastly, on the basis of judgment of Abhishek Kumar v. NBCCL 2017 SCC OnLine Jhar 290, it is submitted that respondent No.2 is a 'State' within the meaning of Article 12 of the Constitution and is amenable to the writ jurisdiction of this Court. Being a 'State', respondent No.2 is bound to act fairly and fulfill its contractual obligation and reimburse the tax to the petitioner. In turn, it ca....
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....any' under Section 2 of the Companies Act, 2013 shows that a 'company' is company incorporated in India and foreign company is company incorporated outside India are separated persons under provisions of the CGST Act and hence, both are separate 'persons' and separate legal entities. Hence, registered place of business of the petitioner in Maldives cannot be considered as 'fixed establishment' of M/s. Sri Avantika Contractors (I) Limited. 18. Furthermore, Sri Dominic Feranandes, learned Senior Standing counsel for CBIC, submits that no doubt the work performed by the petitioner at Maldives is based on 'works contract' as per Section 2 (119) of the CGST Act and relates to contract of services, yet 'works contract' is essentially a contract. The contract was between the petitioner and respondent No.2. The contract was entered into between two parties located in India which means the location of 'supplier' and 'recipient' both is in India. 19. It was strenuously contended that Section 16 of the IGST Act deals with 'zero rated supply' and Clause (a) is about export of goods or services or both. Section 2 (6) of the IGST Act talks about 'export of services'. Supply of any such service....
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....Ruling Authority. Contention of respondent No.2:- 23. Sri S.Dwarakanath, learned Senior Counsel appearing for respondent No.2, at the outset, fairly submits that respondent No.2 is sailing with the petitioner in all respects, except on the aspect of reimbursement of tax to the petitioner by respondent No.2. The learned Senior Counsel urged that the impugned advance ruling (Annexure P-18) is cryptic in nature and does not deal with certain statutory provisions of the GST/IGST Act. For example, the impact of both the 'Explanations' appended to Section 8 of the IGST Act has escaped notice of the said authority. The appellate authority confirming the advance ruling, although referred about certain statutory provisions, did not deal with it in correct perspective. The impugned orders will make the petitioner almost remediless so far in-house mechanism under the aforesaid Acts are concerned. Once advance ruling is issued which is affirmed by the appellate authority, in any proceeding under Section 73/74 of the GST Act, the authorities of almost same level will be influenced, guided and prejudiced by advance ruling. In this backdrop, the writ remedy is the only appropriate remedy and ca....
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.... at Addu city of Maldives. Thus, this is also a relevant factor for determining whether there exists a 'fixed establishment' in Maldives. 28. Apart from this, to counter the argument of the Revenue relating to filing of 'zero rated returns', it is urged that this is not the reason for passing the impugned order by Advance Ruling Authority and Appellate Authority. Reliance is placed on Constitution Bench judgment of Supreme Court in the case of Mohinder Singh Gill v. The Chief Election Commissioner 1978 (1) SCC 405, to canvas that validity of order of statutory authority is to be judged on the basis of grounds mentioned therein and same cannot be supplemented by filing counter affidavit in the Court. 29. By placing reliance on another judgment of Supreme Court in the case of Jayaswal Neco Ltd. v. Commissioner of Central Excise 2015 (322) E.L.T 587 (SC), it is submitted that there cannot be any 'estoppel' against the law. Merely because the petitioner erroneously filed 'zero rated returns', it will not operate as 'estoppel' against the petitioner. More-so, when the petitioner filed its 'zero rated returns', GST laws just came into being and there was lot of confusion amongst the ta....
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....mited for the setting up of the Institute for security and Law Enforcement Studies (ISLES) at ADDU city in Maldives on the terms and conditions contained in its letter of Award No.NBCC/GM (CPG)/2016/817 dated: 04.06.2016 and the documents referred to therein. The award has taken effect from 04.06.2016 i.e. the date of issue of aforesaid letter of intent. The terms and expressions used in this agreement shall have the same meanings as are assigned to them in the "Contract Documents" referred to in the succeeding Article." 34. Similarly, Clause 2.5, 6 (e) and 8.0 of the agreement entered into between MEA and NBCCL are worth mentioning, which read as under: "2.5: The Executing Agency shall invite tenders, on behalf of the Employer, for awarding the different work packages of the Project. For this, it shall prepare the tender documents comprising of the technical specifications BOQ, General Terms and Conditions, Special Conditions etc. Tender(s) shall then be invited by the Executing Agency for an on behalf of the Employer through open tenders or tenders from the short listed, Pre-qualified contractors/agencies meeting prequalification criteria for different packages. The Executing....
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.... territory of Maldives. In this backdrop, the interesting conundrum is whether the Advance Ruling Authority and Appellate Authority were justified in giving a ruling against the petitioner. 39. As noticed above, the parties are at loggerheads on the question whether the establishment/site office maintained by the petitioner and respondent No.2 fall within the ambit of Section 2 (7) 'fixed establishment' of the IGST Act. The parties have also taken diametrically opposite stands on the question relating to 'location of recipient of services' and 'location of supplies or services'. 40. These aspects deserve serious consideration. However, before dealing with the statutory provisions, we deem it proper to briefly state reasons assigned by learned Appellate Authority in OIA dated 16.07.2022 (Annexure P-1) for ruling against the petitioner. The contention of the petitioner was not accepted because (i) as per Clause 3.6 of the agreement, the petitioner will receive consideration from respondent No.2 in 'Indian Rupees'. (ii) Sri Avantika Contractors (I) Limited was registered under laws and regulations of Maldives. (iii) NBCCL was engaged under the aegis of the Ministry of Urban Developm....
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....permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs." (Emphasis Supplied) 42. A bare perusal of this provision makes it clear that the necessary ingredients to bring the 'establishment' within the definition of 'fixed establishment' are existence of (i) establishment with sufficient degree of permanence, (ii) suitable structure in terms of human and technical resources to receive or supply services and (iii) such establishments must be a place other than their registered place of business. In our considered opinion, the expression 'registered place' means registration under Indian laws. The registration under Maldivian law is not covered under Section 2 (7). The necessary ingredients to treat the establishment of the petitioner and respondent No.2 are available which brings it within the definition of 'fixed establishment' because there existed sufficient degree of permanence of such establishments which were used for several years for construction of huge building of ISLES. The letter of OBC dated 27.12.2017 makes it clear that suitable structure/office existed in terms of human and techni....
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....pany registered outside Maldives (in India) got re-registered. Thus, it is difficult to hold that merely because petitioner got Certificate of Re-registration under the Maldivian law, the Maldivian entity became a separate legal entity or person. 47. We say so for yet another reason. If this finding given in OIA is accepted that the petitioner and re-registered Maldivian entity are two separate legal entities, it will be difficult to understand under which authority/contract the said independent legal entity of Maldives was permitted to execute the work. Admittedly, no contract is entered into between respondent Nos.1 and 2 with the re-registered entity of Maldives. In absence thereof, it is difficult to give seal of approval to the finding that the 'works contract services' were rendered at Maldives by independent/separate legal entity. For these cumulative reasons, we are constrained to hold that the petitioner and respondent No.2 had 'fixed establishments' at Addu city, Maldives and the petitioner was 're-registered' at Addu which is evident from the re-registration certificate. Scope of Judicial Review:- 48. We are in agreement with the argument of learned counsel for the pa....
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....ited, who will be held responsible in the event of any non-performance of the agreement. The discussion from where the "individual" goods and services involved in the works contract are received is immaterial in determining the Location of the Recipient, instead, the place where the total service (works contract service), of agreeing to perform has been received will be the location of recipient of service. (Emphasis Supplied) 52. In para Nos.14 of same order, it is mentioned that since supply, the agreement to perform is being made from the place of business for which registration has been obtained i.e., Hyderabad, location of 'supplier of service' will be Hyderabad. Same parameter is applied for recipient in para 22. Para No.14 Para No.22 In this case, the supply, the agreement to perform is being made from the place of business for which registration has been obtained (i.e. M/s Avantika Contractor (I) Limited, 401/A wing D.No.6-3-352/2&3, Astral height complex, road No.1, Banjarahilla, Hyderabad 500034). Hence, this location, i.e. M/s.Avantika Contract (I) Limited with GSTIN : 36AAJCS55046C1ZG at Hyderabad will be the location of the Supplier of services. In this case, ....
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....on of the supplier of services" means:- (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment." (Emphasis Supplied) 55. A comparative reading of definitions of 'location of recipient of services' and 'location of supplier of services' shows that only difference between two provisions is relating to 'receiving' and making the 'supply'. Otherwise, provisions are identically worded. For the simple reason mentioned in preceding para interpreting Section 2(14) of the IGST Act, we hold that the location of the supplier is covered by Clause (b) of Section 2(15). The supply is certainly made through 'fixed establishment' at Maldives, which is other than the place of registration of business of the petitioner i.e., Hyderabad. Hence, in our opinion, the Appellate Authority erred in interpreting and understanding the definitions of 'location of recipient and supplier'. The erroneous reading and understanding of Secti....
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....' in India and any other 'establishment' outside India. Explanation 2 further provides that if the person carrying on a business has a branch or agency or representational office in any other territory, it shall be treated as an establishment in that territory. This provision has totally escaped notice of learned Advance Ruling Authority and Appellate Authority. 59. A combined reading of Explanations 1 and 2 shows that if the petitioner had any 'establishment' in Maldives, it must be treated to be his 'establishment' in that territory and such establishment shall be treated as 'establishment' of distinct person. Once such 'fixed establishment' is treated to be as establishment of distinct person and treated as his 'representational office' in other territory, it will be clear that the 'work contract services' performed by the petitioner are relating with the 'establishment' of the petitioner in India and his 'fixed establishment' in Maldives is his other establishment or 'representational office'. 60. In the peculiar facts of this case, distinct person mentioned in Explanation-I will not mean that petitioner's Maldivian establishment is a separate and independent legal entity as ....
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....sts that the provision was introduced in order to determine the place of supply of services where the location of supplier and recipient is within the territory of India. Except proviso to sub-section (3) of Section 12, the entire Section 12 deals with the aspect of determination of place of supply of services where location of both i.e., recipient and supplier is within India. The proviso to Section 12(3) was interpreted by learned Appellate Authority in the line of his finding that Avantika Contractors (I) Limited, Maldives, cannot be treated as 'fixed establishment'. The re-registered body of the petitioner at Maldives is a different legal entity than the petitioner and Sections 2(14)(a) and (15) (a) will be applicable for deciding the 'location of supplier and recipient'. 64. We have already disapproved the said reasoning given by the learned Appellate Authority. Still, it is relevant to carefully read the said proviso on which heavy reliance is placed by learned Appellate Authority and by Sri Dominic Fernandes, during the course of hearing. The said proviso, in no uncertain terms, makes it clear that if location of immovable property is outside India, the place of supply shal....
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....resaid proviso, the location of recipient will be in Maldives. The proviso was inserted with above mentioned purpose and its literal interpretation does not make it redundant or otiose. 68. In the peculiar factual backdrop of this case, admittedly the location of immovable property i.e., ISLES is located in Maldives/outside India. Hence, the place of supply shall determine the 'location of recipient'. As analysed above, the place of supply of services is at Addu, Maldives. The 'location of recipient' is already interpreted by us by holding that as per Section 2(14)(b), it will be the 'fixed establishment' of respondent No.2 which will be the location of recipient. Thus, even as per the aforesaid proviso to Section 12(3), we are unable to give our stamp of approval to the OIA passed by the Appellate Authority. 69. Section 13 of the IGST Act deals with place of supply of services where location of supply and recipient is outside India. The relevant portion reads as under: "13. Place of supply of services where location of supplier or location of recipient is outside India: (1) The provisions of this section shall apply to determine the place of supply of services where the loc....