TaxTMI 
TaxTMI 
2024 (10) TMI 1308
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess of providing Software Development and Support Services as well as Engineering Support Services (ITS). It is stated to have entered into a Service Level Agreement with its parent and holding company M/s Atlan Pte. Ltd. [Atlan Singapore] located in Singapore for rendering ITS. The petitioner avers that the service provided to Atlan Singapore would amount to an 'export of services' as defined in the Integrated Goods and Services Tax Act, 2017 [IGST]. 4. On 27 October 2022 and 11 January 2023 the petitioner filed two applications for refund seeking the return of unutilized Input Tax Credit [ITC] amounting to INR 46,05,196/- for the period June 2020 to September 2020 and INR 23,61,049/- for the period October 2020 to December 2020. It was these applications which came to be rejected by the Order-in-Original with the authority taking the view that the petitioner was liable to be treated as an "intermediary" between Atlan Singapore and others and consequently the services supplied not being entitled to be placed in the category of 'export of services'. It was these orders which ultimately came to be challenged by way of appeal which met a similar fate in terms of the order dated 22....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the place of supply shall be the location where goods are situated at the time of supply of services: [Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process;] (b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services. (4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or (iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. [***] (10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey. (11) The place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey. (12) The place of supply of online information and database access or retrieval services shall be the location of the recipient of services. Explanation.--For the purposes of this sub-section, person receiving such services shall be deemed to be loca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der is, inter alia, engaged in the business of developing, creating, conceptualizing, generating and accomplishing products and providing, administering, arranging, and transferring services in the field of technology and technology enabling solutions in different fields and including all kinds of hardware and software, both in India and overseas ("Services"); C. The Service Recipient is keen to leverage the resources and wherewithal of the Service Provider towards fulfillment of Service Recipient's Purpose outside India and had approached the Service Provider to provide an expression of interest to render the Services (as defined below) to the Service Recipient; D. The Service Provider has expressed its willingness to provide the Services to the Service Recipient from the Execution Date, on the terms and conditions as mutually agreed between the Parties, towards fulfillment of Service Recipient's Purpose outside India; and E. Pursuant to various rounds of discussions between the Service Recipient and the Service Provider, the Parties are now executing this written agreement to record the terms and conditions agreed between them in respect of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lated from the date of invoice. The Service Provider can also be paid advance fee by Service Recipient based on specific requirement. (b) The Service Provider shall provide its invoices to the Service Recipient in SGD/USD/INR denomination. (c) Notwithstanding anything to the contrary contained herein, the Parties may mutually discuss and modify the due date and the period of settlement of invoices at any time after the Execution Date. 2.3 The Parties hereby agree and acknowledge that the payment of the Service Fees shall be promptly made by the Service Recipient SGD/USD/INR denomination to the designated bank account of the Service Provider. It is further agreed between the Parties that the Service Fees shall be adjusted in order to cover any loss incurred by the Service Provider on account of foreign exchange fluctuation and all the risk relating to foreign exchange fluctuation shall be borne by the Service Recipient. Similarly, any gain on account of foreign exchange fluctuation shall be adjusted by the Service Provider in the subsequent invoice. The payment of Service Fees shall not be unreasonably withheld by the Service Recipient in the event of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, as provided in Annexure A. 3.3 The Service Recipient shall be responsible for all representations, facts and opinions that it makes whether in respect to itself, its relationships, its affiliates, its products/services, its actions/omissions and/or its activities. The Service Recipient shall assume all financial and legal liability for the quality, reliability, merchantability and/or accuracy of all such representations and fully understands that the outcome of the Services rendered by the Service Provider pursuant to this Agreement is contingent on the same. 4. Roles and obligations of the Service Provider. 4.1 Quality of Service. The Service Provider shall make reasonable endeavour that the Services are performed in a professional and competent manner, consistent with industry standards reasonably applicable to such services. 4.2 Approvals and Authorizations. The Service Provider shall procure, or cause to be procured, all necessary information, approvals, permissions, authorisations or decisions (collectively, "Approvals") that are reasonably necessary to render the Services to the Service Recipient. In an event the Service Provider require....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icity in relation to Service Recipient's Business to the potential customers and shall be responsible for any sales and provision of services in relation to Service Recipient's Business. (b) Business Development. The Services Provider shall investigate, select and contact prospective clients and business partners for the Business in India. The Service Provider shall also investigate and evaluate the opportunities for the Business to grow and expand in India. (c) Professional Assistance. The Service Provider shall seek, whenever it is necessary in the opinion of the Service Provider, at its own cost, services of professionals or professional firms, including legal and accounting firms, in order to properly render its roles and responsibilities under this Agreement in India. (d) Branding and Publicity. The Service Provider shall engage in branding and publicity of Service Recipient's Business by engaging and investing the necessary resources and using its best efforts towards advertising, marketing and promoting the Service Recipient's Business." 10. We additionally take note of Circular No. 159/15/2021-GST dated 20 September 2021 issued ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y Requirements for intermediary services The concept of intermediary services, as defined above, requires some basic prerequisites, which are discussed below: 3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus a natural corollary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (the main supply) and one arranging or facilitating (the ancillary supply) the said main supply. An activity between only two parties can, therefore, NOT be considered as an intermediary service. An intermediary essentially "arranges or facilitates" another supply (the "main supply") between two or more other persons and, does not himself provide the main supply. 3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; (1) Main supply, between the two principals, which can be a supply of goods or services or securities; (2) Ancillary supply, which is the service of facilitating or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er which 'A' needs to provide a service of, say, Annual Maintenance of tools and machinery to 'B'. 'A' subcontracts a part or whole of it to 'C'. Accordingly, 'C' provides the service of annual maintenance to 'A' as part of such sub-contract, by providing annual maintenance of tools and machinery to the customer of 'A', i.e. to 'B' on behalf of 'A'. Though 'C' is dealing with the customer of 'A', but 'C' is providing main supply of Annual Maintenance Service to 'A' on his own account, i.e. on principal to principal basis. In this case, 'A' is providing supply of Annual Maintenance Service to 'B', whereas 'C' is supplying the same service to 'A'. Thus, supply of service by 'C' in this case will not be considered as an intermediary. 3.6 The specific provision of place of supply of 'intermediary services' under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India. 4. Applying the above mentioned guiding principles, the issue of intermediary services is clarified through the following i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ervice provided by 'R' to 'P'. In such a case, main supply of insurance claims processing service is between 'P' and 'R', while 'Q' is merely arranging or facilitating the supply of services between 'P' and 'R', and not himself providing the main supply of services. Accordingly, in this case, 'Q' acts as an intermediary as per definition of sub-section (13) of section 2 of the IGST Act. Illustration 4 'A' is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this supply, 'A' is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. 'A' decides to outsource the task of providing customer care services to a BPO firm, 'B'. 'B' provides customer care service to 'A' by interacting with the customers of 'A' and addressing / processing their queries / complains. 'B' charges 'A' for this service. 'B' is involved in supply of main service 'customer care service' to 'A', and ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espect to mark-up being incorporated in the service agreement. It is this reasoning which also appears to have weighed upon the respondents to deny the writ petitioner the refund that was claimed. 13. We find ourselves unable to sustain the stand as taken by the respondent for the following reasons. As would be apparent from the material which has been placed on the record, the provision of ITS was made by the petitioner while located and situate in India. In view of the aforesaid, it would be sub-section (2) of Section 13 which would apply and the place of supply, consequently, being liable to be viewed to be the location of the recipient of service. 14. As we view Section 2(13), it becomes apparent that an intermediary would be one who arranges or facilitates the supply of goods or services between two or more persons. The sample agreement which has been placed on our record clearly belies the view that was taken by the respondents in this regard. As is manifest from a reading of that agreement, the ITS was envisaged to be provided by the writ petitioner itself to the entity situate outside India. The petitioner was clearly not one which was facilitating the supply between ....