Page 104 - GSTL_6th August 2020_Vol 39_Part 1

30 GST LAW TIMES [ Vol. 39
3.1 As per the contract dated 23-5-2016 submitted, the applicant is in-
terested in selling its trade shows or shares thereof to an investor and has asked
FR, to act as a broker for prospective buyer, of its trade shows. FR would ar-
range, facilitate and support direct contract and negotiations between the appli-
cant and interested parties against which the applicant would pay a fee of 5.0%
of the economic value of the business to FR. The fee is in the nature of a ‘success
fee’ and becomes due only in case the applicant enters into binding contract with
a party identified and presented by the broker and is calculated as per the eco-
nomic value of the contractual relationship between the applicant and its con-
tracting party.
3.2 As per Notification No. 10/2017-I.T. (R), dated 28-6-2017, one of the
notified service for which RCM is applicable is “any service supplied by any per-
son who is located in a non-taxable territory to any person other than non-
taxable online recipient”. Import of services by a taxable person in India is liable
to GST under reverse charge mechanism.
3.3 The nature of goods or services supplied by an intermediary must
be same as goods or services supplied by the principal. If the nature of supply of
goods or services by a person is different from the supply of principal, it cannot
be said that the person is merely arranging or facilitating supply of goods or ser-
vices. An intermediary cannot alter the nature or value of supply, which he facili-
tates on behalf of his principal. Further, a person can arrange or facilitates supply
of goods or services belonging to some other person only when he has been au-
thorised by the principal. In view of this, the test of agency must be satisfied be-
tween the principal and the agent i.e. the intermediary.
3.4 In the instant case, FR is only acting as an agent, and the other op-
erative parts of arrangement or facilitation has not been executed by FR. In the
subject case, the intermediary shall be liable to pay tax for such services.
3.5 In respect of the second question i.e. if IGST is payable under re-
verse charge mechanism, since the applicant has other businesses verticals as
well in the entity, whether applicant will be able to avail ITC on GST paid under
reverse charge mechanism.
3.5.1 As per agreement between applicant (seller) and MDIPL (buyer)
supply is done on the basis of “Slump Sale” and Slump sale is an exempted sup-
ply. The term “Goods” has been defined under Section 2(52) to mean any mova-
ble property other than money and securities. GST is not applicable on Slump
Sales considering “business as a going concern” to be outside the scope of
“goods”. In this case, since Slump sale is exempt supply under GST Act, tax paid
(GST) on services performed in order to execute exempt supply is not eligible for
Input Tax Credit (ITC).
4. Hearing
4.1 Preliminary hearing in the matter was held on 2-1-2020. Shri Haseet
Bathiya, Advocate, appeared along with Shri Akshay Sharma, C.A. and request-
ed for admission of the application. Jurisdictional Officer Ms. Smita Ajbe State
Tax Officer (C-719), Nodal-07, Mumbai also appeared. The applicant was asked
to submit additional documents and therefore the case was adjourned.
4.2 The case was fixed and called for hearing on 28-1-2020. Shri Haseet
Bathiya, Advocate, appeared along with Shri Akshay Sharma, C.A. and Author-
GST LAW TIMES  6th August 2020  104