Page 142 - GSTL_20th August 2020_Vol 39_Part 3

356 GST LAW TIMES [ Vol. 39
Exhibit C as submitted by the applicant provides the percentages of
Commission Rates on Net Sales of the products as under
“1.75% of the Net sales price for existing business (225MT GST -5HV) at the
Visakh Refinery and 3% of Net sales for new contracts. Net sales price of
the products shall mean Grace’s FOB price in U.S. dollars for the products
exclusive of freight, customs duties, taxes (including sales and value added
taxes) packaging, insurance and any charges for technical service”.
After the examination of the nature of the marketing and consultancy services
provided by the applicant consultancy between the applicant and its overseas
client, now we take up the issue at hand i.e., whether the services provided by
the applicant are export services or not.
Section 2(6) of IGST Act, 2017 defines export of services as under :
(6) “export of services” means the supply of any service when, - (i) the
supplier of service is located in India; (ii) the recipient of service is located
outside India; (iii) the place of supply of service is outside India; (iv) the
payment for such service has been received by the supplier of service in
convertible foreign exchange; and (v) the supplier of service and the recipi-
ent of service are not merely establishments of a distinct person in accord-
ance with Explanation 1 in Section 8;
Now we look into the basic issue whether the nature of the transaction made by
the applicant fit into the definition of export of service. It is evident from prima
facie understanding of the issue that supplier of service i.e., the applicant is locat-
ed in India and the recipient of the service i.e., Grace Davison (Singapore) is lo-
cated outside India. But the third parameter i.e., the place of supply of service
being outside India is not applicable in the instant case basing on the facts as
submitted by the applicant. The applicant renders its marketing and consultancy
services to its overseas client and carries out all the functions in India as necessi-
tated by its client. The mere fact that the payment has been received in converti-
ble foreign exchange by the applicant will not qualify the transaction of the ap-
plicant as export of services.
In light of the above, this authority opines that it is appropriate and fair
to clarify the applicant about the classification of their services. Basing on the
nature of the activities of the applicant, they would rather qualify for services
rendered by “intermediary” under the clause (13) of Section 2 of the IGST Act,
2017
(13) “intermediary” means a broker, an agent or any other person, by
whatever name called, who arranges or facilitates the supply of goods or
services or both, or securities, between two or more persons, but does not
include a person who supplies such goods or services or both or securities
on his own account;
The applicant in the present case by providing marketing and consultancy ser-
vices, facilitates the supply of goods i.e., fluid cracking catalysts and its additives
from Grace Davison (Singapore) to its clients in the Territory i.e., India. Besides,
the condition that transaction not being done on his own account makes the ap-
plicant rightly fit into the definition of intermediary in the instant case.
In order to identify the taxability of Goods and Services under GST, it is
important to know the place of supply of said Goods or Services to make the said
supply eligible to the kind of tax payable on transaction i.e., whether CGST and
SGST or IGST. In case of Intermediary the provision of place of supply is men-
tioned under Section 13(8) of IGST Act, 2017 as stated under :
“(8) The place of supply of the following services shall be the location of
the supplier of services, namely :-
GST LAW TIMES  20th August 2020  142