- In re Multiples Alternate Asset Management Private Limited (GST AAR Maharashtra)
- Whether GST is applicable on the Advisory & Management Fees received in Indian Currency from Domestic Contributors located in India for the Services rendered by the applicant?
- Whether GST is applicable on the Advisory & Management Fees received in Foreign Currency from overseas Contributors located outside India for the Services rendered by the applicant?
In re Multiples Alternate Asset Management Private Limited (GST AAR Maharashtra)
Whether GST is applicable on the Advisory & Management Fees received in Indian Currency from Domestic Contributors located in India for the Services rendered by the applicant?
The advisory and management fees received by the applicant are for financial services rendered to the AIF as mentioned above. Since the location of both, the applicant and the AIF are in India, the place of Supply is to be determined by applying Sec 12 of the IGST Act, 2017 which is reproduced as under –
“12 (1) The provisions of this Section shall apply to determine the place of supply of services where the location of the supplier of services and the location of the recipient of services is in India.
The applicant in the subject case is supplying financial services to the AIF and such services are covered under Section 12 (12) of the IGST Act, 2017 which is reproduced as under:-
“12 (12) The place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services:
Provided that if the location of the recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services
It is very clear that both, the applicant and the AIF are in taxable territory and the services rendered by the applicant to the AIF are taxable and therefore GST is payable, by application of the provision of Section 12 (12) of the IGST Act, 2017..
Whether GST is applicable on the Advisory & Management Fees received in Foreign Currency from overseas Contributors located outside India for the Services rendered by the applicant?
As discussed above, the Advisory and management Services are provided to the AIF, which is a separate legal entity which makes investment decisions on the advice of the applicant and therefore sub-section 12 of Section 12 of IGST Act, 2017 will apply in this case also as both supplier and the recipient of service are located in India. For the same reason, we do not agree with the applicant’s contention that the transaction with foreign investors should be determined in terms of Section 13 of the IGST Act, 2017 because the recipient of service i.e. AIF is not located outside India and the applicant are not providing any services to the Overseas Contributors.
The transaction also do not qualify to be an export of service as the condition specified in sub-clause (ii) of Sub-section (6) of Section 2 of IGST Act,2017 that recipient of service should be outside India, is not satisfied, and therefore it is not a zero rated supply.
We also do not agree with the concerned officer’s submission that the applicant should be treated as a financial institution which distinctly falls under Sec. 13(8)(a) of the IGST Act, 2017 because no deposits are made with the applicant. The funds of investors are received directly by the AIF which is a separate legal entity.
Also Read AAAR Order:- AAR cannot determine levy of GST on Fees collected from overseas Investors
