IZ Kartex – 2021 (44) G.S.T.L. 205 (A.A.A.R. – GST – West Bengal)

Import of services such as Maintenance and Repair services is covered under RCM.

Facts- The appellant IZ-KARTEX named after P.G. Korobkov Ltd., Russian Federation entered into a Maintenance and Repair Contract (hereinafter referred to as MARC) with Bharat Coking Coal Ltd., Dhanbad (hereinafter referred to as BCCL) on 15-10-2015 for maintenance of 4 nos. of Electric Rope Shovel, supplied by the appellant. The IZ-Kartex have deployed DDP-N, an Indian company as the sub-contractor. DDP-N in turn, issues invoice to the Russian company. Again, the Russian company is raising bills on BCCL against supply of service. The WBAAR in its Ruling No. 04/WBAAR/2020-21, dated 29-6-2020, has held that supply of service to BCCL in terms of MARC is not import of service. The recipient is not, therefore, liable to pay GST on reverse charge basis in terms of Notification No. 10/2017-Integrated Tax (Rate), dated 28-6-2017. The applicant, being the domestic MARC holder is liable to pay tax. The Appellant has filed the instant Appeal against the above Advance Ruling with the prayer to set aside the impugned Advance Ruling passed by the WBAAR or pass any such further order(s) as may be deemed fit.

Held-  The Appellate Authority for Advance ruling after considering the facts and circumstances held that the AAR has concluded that the MARC Holder maintains suitable structures in terms of human and technical resources at the sites of BCCL. It ensures supervision of the equipment, supply of spares and consumable and overheads for 5000 working hours for seventeen years, indicating sufficient degree of permanence to the human and technical resources employed at the sites. From this the AAR concluded that the MARC holder does all these from the fixed establishment as defined under Section 2(7) of the IGST Act and hence the location of the supplier should be in India as per Section 2(15) of the IGST Act. While going through the subject order of Advance Ruling, it is seen that the WBAAR has not considered/discussed the various other terms of the agreement which says, inter alia, that the entire control of the activities would rest with the foreign entity, which had entered into an agreement with BCCL. In view of the above findings, modify the order of Advance Ruling to the extent that the supply of service by the appellant to BCCL qualifies as import of service as defined under Section 2(11) of the IGST Act, 2017 and GST is payable on such import of service by BCCL under Reverse Charge Mechanism in terms of Notification No. 10/2017- Integrated Tax (Rate), dated 28-6-2017.


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