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Activities undertaken by the applicant are for and on behalf of clients to facilitate supply of goods and services between the clients their customers not qualify as Zero Rated Supply

Shanti Prime Publication Pvt. Ltd.

Supply of service—In the instant case, question before authority is that whether the below mentioned services to be rendered qualify as 'Zero Rated Supply in terms of Section 16 of the IGST Act, 2017 or not.

The company is incorporated to provide back office support services to overseas companies. Clients are engaged in Trading of Chemicals and other products in International Trade. Vserv will come into picture after finalization of Purchase / Sale order by a Client.

Vserv will also maintain records of employees of Clients, their payroll processing etc. All the payments to third parties like, supplier, Inspection Agency, Shipping Line, employees etc. will be done directly by Clients and Vserv will maintain accounting of the same. Vserv will be compensated for its services either on fixed monthly basis or as per the volume of transactions, on mutually agreed terms, in convertible foreign Exchange.

Held that— Admittedly appellant is to provide back office support services, payroll processing, to maintain records of employee to overseas companies i.e. clients and after finalization of purchase / sale between the client and its customer. As per the legal understanding of the applicant aforesaid services proposed to be rendered qualify as 'Zero rated supply' in term of section 16 of the IGST Act. In order to have seal of approval on the issue, the present application is made and applicant has requested this authority to decide the issue.

Applicant as a person who arranges or facilitates supply of goods or services or both between the overseas client and customers of the overseas client, and therefore applicant is clearly covered and falls in the definition of an intermediary as defined under the IGST Act. As the applicant is held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant - the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the state of Maharashtra, India. 'To qualify transaction of supply of services as export of services that transaction has to satisfy all five ingredients of the definition of export of services simultaneously.

In the present case, the condition at (iii) of the above definition is not satisfied and hence without examining and getting into the contention of the jurisdictional officer with regards to condition at (v) of the said definition as to distinct person which would require more specific and detailed examination and verification on their part to get correct factual position in this regard, the services proposed to be rendered by the applicant do not qualify as 'export of services' as defined u/s.2(6) and thus not a 'zero rated supply' as per sec.16(I) of the IGST Act, 2017.

The facts of the present case are different and not similar to facts of M/S GODADDY INDIA WEB SERVICES PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI-IV [2016]  [AUTHORITY FOR ADVANCE RULINGS] - In case of GoDaddys the provision of support services was admittedly on principal to principal basis and were provided with sole intention of promoting the brand GoDaddy US in India for augmenting its business - In the present case, the activities undertaken by the applicant are for and on behalf of clients to facilitate supply of goods and services between the clients their customers.

Ruling— The aforesaid services as proposed to be rendered do not qualify as Zero Rated Supply in terms Of Section 16 of the integrated Goods & Service Tax Act, 2017. [2018] 2 TAXLOK.COM 304 (AAR-Maharashtra)