In re IBI Group India Pvt. Ltd. (GST AAR Karnataka)
Q1. Whether Consultancy services rendered to ADB, Manilla would qualify as ” export of services” in terms of Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act)?
A1. Determination of place of supply is not covered under any of the clauses (a) to (g) of Section 97(2) of the CGST Act 2017. Further, the use of term ‘shall’, is an imperative command restricting the scope of advance ruling only to the questions enumerated in the said sub-section. Thus, to answer the question relating to determination of place of supply, is beyond the scope of advance ruling. This authority, therefore, cannot answer the first question in the application.
Q2. If the Consultancy Services rendered to ADB, Manilla do not qualify as ” export of services”, whether ADB would be required to obtain refund of GST charged on invoice issued for consultancy services in terms of Section 55 of the Central Goods and Services Tax, 2017 (“CGST Act”) or the services would be exempt as per provisions of the Asian Development Bank Act, 1966 (“ABD Act”)?
A2. The second question is a conditional one and comes into existence only if the impugned services of the applicant do not qualify as “export of services”. This question becomes redundant as the first question cannot be answered by this authority. Therefore the instant application is liable for rejection for the reasons mentioned above.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s. IBI Group India Pvt. Ltd., # 241, 3, 6th Cross, 1st Stage, Binnimangala, Indiranagar, Bengaluru-560038, having GSTIN 29AABCI5556K1Z5, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act, KGST Act.
2. IBI Group India Private Limited (“IBI India”), in joint venture with IBI Group Professional Services (Canada) Inc (“IBI Canada”), has entered into a Contract with Asian Development Bank, Manilla (“ADB”) for rendering Consultancy Services (IBI India and IBI Canada are jointly referred to as “IBI” herein).
3. In view of the above, the applicant has sought advance ruling in respect of the following questions:
a) Whether Consultancy Services rendered to ADB, Manilla would qualify as ” export of services” in terms of Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (“IGST Act”)?
b) If the Consultancy Services rendered to ADB, Manilla do not qualify as “export of services”, whether ADB would be required to obtain refund of GST charged on Invoice issued for Consultancy Services in terms of Section 55 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) or the services would be exempt as per provisions of the Asian Development Bank Act, 1966 (“ADB Act”)?
4. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue:
4.1 The Consultancy Services, broadly, envisage multifarious study to conceptualise a transit-oriented development plan in respect of construction of new metro lines, phases 2A and 2B, with a total length of 56 km including 30 stations and three depots, at Bengaluru, Karnataka. In this regard, the construction of new metro lines would be undertaken by Government of Karnataka, for which Government of India requested ADB for financial assistance.
4.2 The Consultancy Services or Technical Assistance support in respect of creating a viable vision document, having intertwined objectives of developing public mass transport systems for Bengaluru city and its urban planning, is purported to encapsulate the following:
(i) Prioritizing integrated and systemic urban planning to manage growth, catalyse strategic renewal of the city core, and enhance competitiveness, sustainability and inclusiveness of the city.
(ii) Creation of a ridership base that improves the economic and financial viability of mass transit investment.
(iii) Accessibility benefits of a comprehensive public transport system for all city residents.
(iv) Using land as a revenue Source to finance long term investment needs of the city.
(v) Addressing complex and intertwined economic and technological needs.
5. Applicant’s Interpretation of Law:
5.1 Export of Services
5.1.1 As per Section 16 (1) of the Integrated Goods and Services Tax Act, 2017 (“IGST Act”) , “export of services” qualifies to be ” zero rated supply”, which means that there would be no levy of GST on services qualifying as “export of services”.
5.1.2 For qualifying as “export of services”, specific conditions, as provided under Section 2(6) of the IGST Act, should stand fulfilled. The said conditions and whether such conditions are fulfilled vis-a-vis the present facts is discussed in the table below:
