In re Dry Blend Foods Pvt Ltd. (GST AAR Uttarakhand)
(a) Whether Overseas Commission Agent is covered within the definition of the term ‘intermediary’ as provided under section 2(13) of the IGST Act, 2017;
Overseas Commission Agent is covered within the definition of the term ‘intermediary as provided under section 2(13) of the IGST Act 2017-
(b) Whether services received by applicant from the Overseas Commission Agent falls within the meaning of the term ‘import of services’ as provided under section 2(11) of the IGST Act, 2017;
Services received by applicant from the Overseas Commission Agent do not fall within the meaning of the term ‘import of services as provided under section 2(11) of the IGST Act, 2017;
(c) Whether the applicant is required to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent.
The applicant is not required to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE , UTTRAKHAND
Note: An appeal against this ruling lies before the appellate authority for advance ruling under Section 100(1) of the Uttarakhand Goods and Services Tax Act, 2017, constituted under Section 99 of the Uttarakhand Goods and Services Tax Act, 2017, within a period of 30 days from the date of service of this order.
1. This is an application under Sub-Section (1) of Section 97 of the Central Goods & Service Tax Act, 2017 and Uttarakhand State Goods & Service Tax Act, 2017 (hereinafter referred to as CGST/SGST Act) and the rules made there under filed by M/s Dry Blend Foods Pvt. Ltd., Village Chandpur, P.O.-Hempur, Udham Singh Nagar, Uttarakhand-244716, (herein after referred to as the “applicant”), a company registered under the Companies Act, 2013 and registered with GST1N- 05AACCD8877D1ZK under the CGST Act, 2017 read with the provisions of the UGGST Act, 2017.
2. In the application dated 11.01.2022 the applicant submitted that they are a manufacturer and carries on the business of supply of inter-alia seasonings, spices, premixes and similar food products to its customers located within and outside India. And in order to supply (export) its goods to customers located outside India, they approach foreign customers both on its own and through third party intermediaries or business facilitators whose job is to search and find customers located outside India and thereafter, the intermediaries connect them with the applicant. After finalizing the terms and condition related to export of goods, payments etc. with the customers located outside India the Third party intermediaries assist the applicant to export the goods manufactured by them to the prospective buyers who are located outside India.
2.2 In order to increase its export supply the applicant entered into a Memorandum of Understanding Cum Agreement with one Mr. Bobby Kapoor, a resident of Dubai (UAE), which is an Intermediary’ or ‘Overseas Commission Agent’ or ‘Service Provider’.
2.3 Under the MOU, the said Intermediary, i.e. Mr. Bobby Kapoor, in the instant case, has to provide the primary service of facilitating the export of goods by arranging purchase orders from various customers located in foreign territory and for such facilitation, the applicant would pay consideration to the Intermediary. Thus, the role of such Intermediary is to facilitate/arrange for export of Applicant’s goods outside India.
3. In view of the above facts, ‘the applicant’ is seeking an advance ruling on following issues:
(a) Whether Overseas Commission Agent is covered within the definition of the term ‘intermediary’ as provided under section 2(13) of the IGST Act, 2017;
(b) Whether services received by applicant from the Overseas Commission Agent falls within the meaning of the term ‘import of services’ as provided under section 2(11) of the IGST Act, 2017;
(c) Whether the applicant is required to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent.
4. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions; therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act.
5. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
6. As per the said sub-section (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of:
(a) Classification of any goods or services or both
(b) Applicability of a notification issued under the provisions of this Act,
(c) Determination of time and value of supply of goods or services or both,
(d) Admissibility of input tax credit of tax paid or deemed to have been paid
(e) Determination of the liability to pay tax on any goods or services or both
(f) Whether the applicant is required to be registered
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.
6.2 In the present case applicant has sought advance ruling on classification and determination of the liability to pay tax on supply of services. Therefore, in terms of said Section 97(2)(a) & (e) of CGST/SGST Act, 2017, the present application is hereby admitted.
7. Accordingly opportunity of personal hearing was granted to the applicant on 22.02.2022. Sh. Ashwarya Shanna, Advocate, on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submission already made in their application. Ms. Preeti Manral, Deputy Commissioner, SGST-Dehradun, Concerned Officer from State Authority was also present during the hearing proceedings. She presented the facts and requested the authority to decide the case on merits.
8. From the record submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AACCD8877D1ZK Before proceeding in the present case, we would first go through the submissions filed by the applicant and the same is summarized as under:
(i) the applicant is a manufacturer-supplier of seasoning, spices, premixes and similar food products to its customers located within and outside India;
(ii) to expand their market, they sometimes enter into an agreement with some specified person, whose job is to search & find out customers, located outside India and to facilitate the supply of goods manufactured by the applicant outside India;
(iii) for such facilitation, the applicant pay commission of a fixed component @ 4000 UD $ per month plus a variable component agreed between them, on the basis of FOB value of the consignment exported outside India;
(iv) the entire flow chart for supply of goods facilitated through such specified person is as follows:
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