In re Stovec Industries Ltd. (GST AAAR Gujarat)
Supply of service sub-contracted by recipient company cannot be considered as ‘intermediary’
The AAAR, Gujarat, in the matter of M/S. Stovec Industries Ltd. [Advance Ruling No. GUJ/GAAAR/APPEAL/2021/32 dated November 2, 2021] modified the ruling passed by the AAR, Gujarat and held that, supply of installation/up-gradation of machines and training services for and on behalf of the Company located outside India, by the supplier in India will not fall under the definition of ‘intermediary’.
Facts:
M/s. Stovec Industries Ltd. (“the Appellant”) is the supplier of products in textile and graphics printing market and engaged in manufacturing rotary screen printing machine, installation and servicing of the machines, and also offers products for conventional and digital engraving methods. The Appellant entered into a contract with SPG Prints Austria GMBH (“SPA”) to provide particular services to customers of SPA in India, as per SPA’s instruction, that includes installation / up-gradation of machines sold by SPA, training at SPA’s customers’ site etc., and in return the Appellant receives commission as consideration in convertible foreign currency periodically for service contracts sold in India from SPA. Further, The Appellant would raise invoice on SPA on the basis of number of hours spent on supply of service in terms of the said contract on the agreed rates.
The Appellant has filed this appeal, being aggrieved of the ruling passed by the AAR, Gujarat in Advance Ruling No. GUJ/GAAR/R/70/2020 dated 17.09.2020, wherein it was held that, the transaction of the Appellant is a composite supply of service and categorized as an intermediary and are supplied to the Indian customer and not the SPA and further issues were raised:,
Issues:
1. Whether the transaction of the Appellant should be categorized as individual supply or composite supply of service under the Central Goods and Services Tax Act, 2017 (“the CGST Act”)?
2. Whether, the transaction of the Appellant is to be reckoned as being provided to SPA or to the customers of SPA located in India?
3. Whether, the transaction of the Appellant could be categorized as that of an “intermediary” under Section 2(13) of the Integrated Goods and Service Tax Act, 2017 (“the IGST Act”)?
4. Whether, such transaction qualifies to be “Export of service” as per Section 2(6) of IGST Act?
Held:
The AAAR, Gujarat, in Advance Ruling No. GUJ/GAAAR/APPEAL/2021/32 dated November 2, 2021 held as under:
