GST applicable on services
Case Title | Dubai Chamber of Commerce |
Court | Maharashtra AAAR |
Honorable Judges | Member Ashok Kumar Mehta and Member Rajeev Kumar Mittal |
Citation | 2022 (6) GSTPanacea 391 HC Maharashtra MAH/AAAR/AM-RM/08/2022-23 |
Judgement Date | 23-June-2022 |
Council for Petitioner | Mr. Saket Patavari |
Council for Respondent | Not Applicable |
In favour of | Assessee |
Section | Section 101 of CGST Act, 2017 |
Appellate Authority for advance ruling,Maharashtra bench of Milind Torawane and Seema Arora, has held that GST is leviable on services provided by Liaison Office to Foreign HO.
GST applicable on services
FACTS OF THE CASE
Dubai Chamber of Commerce and Industry (“the Appellant or DCCI LO”) is the LO of the Dubai Chamber of Commerce and Industry, Dubai (“the Head Office”) that provides services for connecting business partners in Dubai with businesses in India for a consideration from the Head Office. The Appellant is a non-profit organization, formed to represent, support and protect the interests of the Dubai business community in India, by creating a favourable environment, promoting Dubai businesses and supporting the development of business in India, wherein the Appellant undertakes certain liaison/representation activities in India, attending and representing the Head Office in various seminars, conferences & trade fairs, connecting businesses in India with business partners in UAE and vice versa, and organizing events & interactions with Indian stakeholders for sharing information about Dubai.
This appeal has been filed by the Appellant challenging the ruling passed by the AAR, Maharashtra vide Advance Ruling No. GST-ARA-35120 I9-20/B-14 dated May 24, 2021, holding that, that the activities undertaken by the Appellant will tantamount to those of “intermediary” as the Appellant is arranging and facilitating the supply of goods or services or both between the LO and the Head Office by connecting them by way of introductions/references, and therefore such activities will be covered under the ambit of “Supply” as provided under Section 7 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), and accordingly, the Appellant are required to take GST registration and discharge their GST liability on the amount received from their Head Office.
Further, it was held that, the Appellant is receiving consideration from the Head Office in excess of expenses incurred by it, and the Appellant cannot be treated as a non-profit organization. The Appellant contended that neither the Appellant nor the Head Office is receiving any sort of consideration in the form of a fee or commission from any company in India for acting as a link between the LO and the Head Office. Further, all the expenses incurred by the Appellant (predominantly office rent, salaries, and consultancy services), are to be reimbursed from the Head Office on a cost-to-cost basis. Thus, no consideration is to be charged/ paid for such activities.
1) Whether the activities performed by the Appellant shall be treated as supply under the GST?
2) Whether the activities undertaken by the Appellant at the behest of their Dubai Head Office can be construed as that of an “intermediary”?
3) Whether the Appellant is required to obtain the GST registration?
4) Whether the Appellant is required to pay the GST.
GST applicable on services
COURT HELD
The AAAR, Maharashtra in Order No. MAH/AAAR/AM-RM/08/2022-23, held as under: Observed that, the Appellant is merely acting as a link between the businesses in India and Dubai by sharing the details of the potential business partners of India or Dubai, and the Appellant is not arranging or facilitating the actual supply of any goods or services between the Indian businesses and Dubai businesses.
Analysed the provision of Section 13(5) of the IGST Act, and noted that the Appellant is organising various events like seminars, conferences, round table discussions, etc. events in India. Therefore, the place of supply of such services will be in India. Stated that, the Head Office, is providing various services for which fees are charged from the Appellant. Thus, it is clear that Head Office appears to be a profit-making organization, and the activities undertaken are covered under the scope of “Commerce”, “Business” and “Supply”. Further noted that the Appellant is charging a consolidated amount from the Head Office. Thus, the bunch of activities undertaken by the Appellant is nothing but the “mixed supply” according to Section 2(74) of the CGST Act.
Thus, GST is payable on the entire amount received from the Head Office for providing the said mixed supply of support services. Opined that the Appellant is providing support services to their Head Office, which attracts the GST at the rate of 18% as per the Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 (“the Services Rate Notification”). Modified the ruling passed by the AAR, to the extent that the Appellant is not acting as an “intermediary” as per Section 2(13) of the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”). Held that, the activities performed by the Appellant at the behest of their Head Office will come under the ambit of “Supply” in terms of Section 7(1)(a) of the CGST Act and are required to take the GST registration, and discharge their GST liability, on the amount received from their Head Office.
GST applicable on services
ANALYSIS OF THE JUDGEMENT
By noticing the above order we analyse that it can be construed that the liaison office is a mere extension of the foreign Head office and no separate identity can be established nor can be termed as an intermediary. Further, activities undertaken by the liaison office shall not be covered under the definition of supply. Hence, there is no taxable supply and therefore shall not be liable to GST.
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Dubai Chamber of Commerce
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Maharashtra AAAR