In an exciting development, the Maharashtra Authority for Advance Rulings (AAR-Maha) seems to have held divergent views on taxability (Goods & Services Tax) of returned-office operation in India. In the matter of NES Global Specialist Engineering Services Private Ltd (NES India), which had proposed to go into an agreement with another subsidiary (NES Abu Dhabi) of its parent (NES UK), the AAR-Maha felt that the transaction became ‘Zero Rated Supply,’ and also an export of service underneath the GST Act — which intended no GST.
However, when similar trouble become raised in the be counted regarding Vserv (Vserve Global Private Ltd) earlier than the equal AAR, the reaction was pretty contrary. In the case of NES India, it was proposed that this was to offer services in admire of the overseas business carried through NES Abu Dhabi. The services could include accounting, income invoicing, purchase invoicing, cash receipt posting, bank payment entries, other receipt entries, credit manipulate paintings, assist task work, payroll assistance, and many others.
In different phrases, the Indian office will provide returned-office operations. The Indian firm approached AAR with questions: whether or not the transaction in a query is a Zero Rated Supply or Normal Supply beneath the GST Act. If the said supply is Zero Rated Supply, can the same be considered an export of provider below the GST Act? The AAR located that each the applicant and the customer are not institutions of the identical man or woman, even though they may be of organization businesses. Key management persons are one-of-a-kind, and neither of them holds shares of each different, which means they do no longer manage every other. The Indian companies will receive prizes in the forex for offerings.
The Bench also located that there may be no courting like principal and agent. “We find that the applicant isn’t a person who arranges or facilitates the supply of services between or greater persons and consequently the proposed facilities would now not fall to be categorized as ‘middleman offerings,’ the Bench stated. This is one of the right rulings given on the aspect of taxability of returned-office operations in India. Indeed such operations do qualify as exports, and no GST has to follow,” Anita Rastogi, the Indirect Tax Partner at PwC, stated.
However, when a similar difficulty become raised in the count number concerning Vserv (Vserv Global Private Limited) before the identical AAR, the response became pretty contrary. The Bench determined that the place of supply in case of services supplied by way of the applicant being intermediary would be the area of the supplier of services i.E—the vicinity of the applicant is located in Maharashtra.
Supply of offerings:
To qualify a transaction of delivery of offerings as export of services, that transaction has to fulfill all the substances (the dealer of carrier is placed in India, the recipient is placed outdoor India, the region of supply of offerings is outside India, fee for such services to be received in foreign money and the dealer of service and the recipient of offerings aren’t just institutions of a distinct character). Keeping this kind of in thoughts, the AAR answered within the negative to the query that the transaction is dealt with as ‘Zero Rated Supply.