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Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Law/2018-2019/3521

Whether the “Commission” received by the applicant for providing services as an “Intermediary” between an exporter and an Indian importer, is an “export of service” falling under Section 2(6)?
CASE LAW


Case
:VISHAKHAR PRASHANT BHAVE
Citation:GST-ARA-23/2018-19/B-87-Mumbai
Issue: Whether the “Commission” received by the applicant for providing services as an “Intermediary” between an exporter and an Indian importer, is an “export of service” falling under Section 2(6)?
Brief Facts:  The Applicant,  Ms. Vishaka Prashant Bhave, is the proprietor of the firm M/s. Micro Instruments, Mumbai, is a sole Proprietary Concern, duly Registered under the CGST/SGST and IGST Acts having  Reg. no. 27AHSPB0847K1Z2 and is carrying on trading business in Laboratory Instruments, its spare parts, Laboratory Equipment, and other related activities . One of the activities of Micro relates to providing services to its Principals at Germany, by way of procuring Purchase Orders (P.O.) from the parties desirous of purchasing advanced type of Laboratory Equipment, by negotiating the terms of supply including fixation of price above the floor price fixed by the Principals (known to the Applicant alone). If Micro can negotiate better price than the floor price, the difference between the floor price and actual price is given to Micro by way of “Commission” in “convertible foreign exchange”
Appellant’s contention: The applicant contended that the commission received by them in in International/cross border transaction, for acting as a Broker or facilitator, in procuring from an Indian Customer/s purchase order for importing Laboratory Equipment from Germany in convertible foreign exchange for rendering services as an “intermediary” between an exporter abroad receiving such services and an Indian importer of an Equipment is an export of service and outside the purview of section 13(8)(b) and attracting zero rated tax under section 16(1)(a) of the IGST act.
Respondent’s Contention & Reasoning of Judgment:As refers to the section 2(13) of IGST Act, 2017 defined intermediary , in simple terms “intermediary” can be explained as a firm or a person, etc. who acts as a link between parties for the conduction of business. From the above definition we find that an intermediary can be a broker, an agent or any other person who arranges and facilitates the supply of goods and/or services between two or more persons and who cannot change the nature of supply as provided by the principal. Since the applicant, being the supplier of service is located in India and the recipient of Service i.e. supplier of goods is located outside India, Section 13 of the IGST Act, 2017 would be applicable to determine the place of service and the place of supply of services in the instant case is in taxable territory, the said intermediary services cannot be treated as export of services under the provisions of the GST laws.Section 8 of the Integrated Goods and Services Tax Act, 2017 deals with the provisions of intra-State.  Applying the provisions of Section 8(2) which states that ‘subject to the provisions of Section 12, in case where the location of the supplier and the place of supply of services are in the same State or in the same Union territory, the supply of service shall be treated as intra-State supply’. As per intra-State provisions contained in Section 8(2), the said provisions are subject to the provisions of Section 12 of the IGST Act. As per Section 12, the provisions of Section 12 would be applicable only for determining the place of supply of service where the location of supplier of services and the recipient of the services is in India. When recipient is located outside India the said provisions of Section 12 cannot be made applicable and since provisions of Section 8(2) are inter-linked with provisions of Section 12, the same cannot be made applicable in case the recipient of service is located outside India. Thus we find that in case the intermediary services are provided to the recipient located outside India, the inter-state provisions as contained under Section 7(5)(c) shall be applicable and hence IGST is payable under such transaction.
Decision:  Services provided by applicant falls under sec 7(5) (c) of IGST Act, and IGST is payable under such transaction.
Comment: The phrase ‘supply of services in the taxable territory’ is to be determined in general terms like if the service provider is located in India, it shall be considered that services have been provided in India. Like in the present case, since Appellant has providing the services of commission agent, it shall be considered that the services have been provided in India and by virtue of the provision contained in section 7(5) (c), it will be considered as inter-state supply on which IGST will be payable, IGST will be payable in the present case by appellant.
 
Prepared by Kasif
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