In re M/s Cartus India Private Limited (GST AAR Karnataka)
Whether the gamut of services collectively referred to as ‘Relocation Management Service’ provided by the Applicant, would constitute as a composite supply or a mixed supply for the purpose of taxability under GST?”
1. The services supplied by the applicant do not constitute a Composite Supply and would be a mixed supply, when the services are billed for a single price in case where the relocation related services are actually provided by them.
2. The services provided to the company as an agent are “management support services of relocation related services” which is a single service covered under SAC 9985 and is covered under entry 23(11) of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017.
Read AAAR Ruling in this case –‘A la carte’ services relating to employee relocation is neither a composite nor a mixed supply
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Cartus India Private Limited, (called as the ‘Applicant’ hereinafter), having GSTIN number 29AAECC2213N1ZM, has filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 and Section 97 of the KGST Act, 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000-00 each under the CGST Act and the KGST Act.
2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling respect of the following question:
“Whether the gamut of services collectively referred to as ‘Relocation Management ServiCe’ provided by the Applicant, would constitute as a composite sujiply or a mixed supply for the purpose of taxability under GST?”
3. The applicant furnishes some facts relevant to the stated activity:
a. Cartus India Private Limited (hereinafter referred to as ‘CIPLT the Applicant’), is a private limited company incorporated in India on 6th December 2010. The Applicant is a subsidiary of Cartus Corporation USA (hereinafter referred to as tartus US’) and Cartus Global Holdings Limited, Hong Kong.
b. The Applicant is registered under the Goods and Services Tax (hereinafter referred to as ‘GST’) in the state of Karnataka under its registered office at 201, prestige Sigma, 3 Vittal Mallya Road, Bengaluru, 56001, Karnataka, India.
c. The Applicant is engaged in supply of ‘Relocation Management Service’ to its clients located in India, which primarily involves facilitation/administration/management of relocation of client’s employees from one location to another. In this regard, the Applicant enters into relocation service agreements/ statement of work with its clients. Sample agreements denoting the rendition of relocation management service by the Applicant to its clients are provided below:
i. Relocation Service Agreement entered between the Applicant and Client 1 executed on 14 November 2011 (hereinafter referred as RSA’)
ii. Statement of work entered between the Applicant and Client 2, in reference to the Master Service Agreement executed on 28 December 2009 (hereinafter referred as ‘SOW”
d. The primary objective of the Applicant of rendering Relocation Management Service can be substantiated by referring to the Objective and Scope clause of the SOW, that is reproduced below: “Cartus, in its role as a fully outsourced relocation service provider, will manage, administer and facilitate the relocation of Client’s employees from one location to another, as directed by Client, Cartus will provide all required support and coordination necessary to complete as employee relocation.”
e. Currently, for the purposes of GST, the services provided by the Applicant are classified as ‘Support Services’ under chapter heading 9985.
4. Regarding the nature of activities undertaken by the applicant, the applicant states as under:
4.1 The Applicant is engaged in the rendition of Relocation Management Service provided by Applicant to its clients include policy counseling, temporary living, home finding program, setting-in services etc. In this regard, applicant draws reference to the SOW (Services and Procedures: Dornestic India Moves) which carves out the list of services, when provided together forms the Relocation Management Service. An illustrative list of services under the said exhibit has been reproduced below:
“Program Administration
A. Policy Counseling and Expense Administration: Documentation, coordination and administration of Client processes, policies and procedures, explanation to employee of relocation benefits according to Client’s relocation policy, discussion and resolution of exception requests. Hiring, management and authorization of third-party service providers for services including in this Agreement. Expense administration will include the audit, tracking and/or payment of Employee expenses incurred through the Employee’s arrival in the payment of Employee expenses incurred through the Employee’s arrival in the destination location (excluding tax payments). Cartus will pay third party invoices for services detailed in this Agreement, or such other third party invoices as agreed by Cartus.
B. Temporary Living: Coordination of temporary living with a Cartus preferred supplier on behalf of the Employee.
C. Move Management:
1) Moving Services: Cartus will coordinate the shipment and storage of the Employee’s household goods using Cartus’ network of household goods carriers and/or freight forwarders. Cartus collects commissions as a licensed broker (MC398301 B) and arranger of transportation services.
2) Permanent Storage Management: Selection, hiring and management of household goods in permanent storage (long term storage) and payment of permanent storage invoices. Goods are placed in long term storage at the origin or destination location and remain in storage for the duration of the assignment or subsequent assignments.
International Host Country Services
Client will use Cartus and/or Cartus selected suppliers to provide International Host Country Services as detailed below:
A. Home Finding Programs
1) Accompanied Home Finding (By Cartus preferred Local Destination Service provider (“DSP)). Employee is accompanied by DSP providing direct personal support throughout all home search activities. DSP co-ordinates home search activities, negotiates leases, and manage all real estate brokers.
B. Leasehold Assistance
1) Lease Coordination and Negotiation, (for Employees who have already found a property). Lease review (if legal review is required the cost will be charged as a Direct Expense), negotiation of lease terms, coordination of all signatures required, property walkthrough and completion of a property condition form.
2) Leasehold Improvements, Assistance with negotiated improvements prior to move-in to property. Coordination of improvements and repairs to the property as required by the employee and approved by the landlord.
3) Lease coordination and Renewal, (For Employees who are extending lease at current location). Lease review (if legal review is required cost will be charged as a Direct Expense), and coordination of all signatures required.
4) Leave Novation, Negotiation of change of name (landlord or tenant) and coordination of all signatures required.
C. Settling-In Services
1) Settling-In Complete. Provides welcome kit review, neighborhood familiarization, commuting advice and planning, shopping, dining, exercise facilities, entertainment options, medical facilities, domestic help assistance in hiring, currency exchange information, groups and activities discussion, assistance with utility hookup, bank account set up, local registration, six month information line available during business hours, and assistance with the completion of driver’s license forms and scheduling of driving lessons and exams.*
*Available as part of setting-in-services in some countries
2) Setting-In Assisted. Provides welcome kit review, commuting advice and information on shopping, dining, exercise, entertainment, medical facilities, currency exchange, group activities, local registration bank and utility set up.
D. School Finding Assistance
1) Education Complete, provides information and schooling options, scheduling of visits to potential schools, assistance with enrollment process including completion of forms and translation, tracking of enrollment, and assistance with retrieving deposit upon departure.
2) Education Assisted, provides information and schooling options, and scheduling of visits to potential schools.
4.2 Similar to the above services, the Applicant provides various services to its client described in detail under Article 23 of the RSA. These services include destination-based services, global departure services, policy counselling, immigration process, counselling/administration, temporary living management, household goods shipment arrangements, expense administration, home country property management facilitation, departure programme, language training coordination etc., which encompass to form the Relocation Management Service.
4.3 The arrangement between the Applicant and its client is based on the fundamental principle that such Relocation Management Service is primarily for facilitation of smooth transition of client’s employees and/ or his family to another location. To ensure the smooth transition of employees, the client chooses the services that are offered by the Applicant.
4.4 Further, the number of services to. be procured by the client from the Applicant is determined basis the requirement of client’s employees and various other faCtors viz. employee title, family makeup, 1.6/ from location etc. In this regard, drawing reference from the RSA, the Applicant offers packages under the relocation Management Service, in either of the following ways:
a. Bundled program of a single consideration:
Under this program, the Applicant offers a multitude of services in a package that are essential for the relocation of an employee and/ or his family to another location.
This program is a constitution Of different packages that involves various services brought under a bundled form. The said packages offer options to the clients befitting to their specific needs. Therefore, the client opts for the package that is most suitable, for relocating a specific employee (with or without family) to any other location. This program may be referred to as the standard program wherein certain sets of packages have been formed and could be opted with no customizations.
It is imperative to note that such services are provided for a single cons’cleration, wherein the separate line-item wise pricing is not ident lied. An illustrative list of this program is outlined herein below:
