Facts: M/s. NES Global Specialist Engineering Services Private Limited (“The Applicant or “NES India”) located in India and other company M/s NES Global Talent Recruitment Services situated in Abu Dhabi (“NES Abu Dhabi” or “tire client”), both the company NES India and NES Abu Dhabi is a subsidiary company of M/s. NES Global Limited (“NES UK”). Further, NES India and NES Abu Dhabi have proposed to enter into a service agreement through which the applicant will provide support service in respect of the foreign business carried on by NES Abu Dhabi as per the Master Services Agreement (“MSA”).
However, every service provided by NES India will form part of the MSA. The services provided by NES India would be as following, for example, Accounting, Sales Invoicing, Purchase Invoicing, Cash receipt posting, Bank Payment entries, other receipt entries, Credit Control work, Support Assignment work; Payroll assistance, storing and scanning of data to the data storage disk and any other work would be required by them as per their requirements.
Issues Involved: The Applicant has sought advance ruling in respect of the following questions:
(i) Whether the transaction in question is a Zero-Rated Supply or a Normal Supply under the GST ACT?
(ii) If the said supply is a Zero-Rated Supply, then can the same be considered as an export of service under the GST Act?
Applicant’s Interpretation of law: The Applicant contended that the above proceeds are received in fully convertible foreign exchange and the same has been confirmed by bank advice. Further, the Applicant is of the view that above transaction will fall under Export of Service, on considering the fulfilment of the conditions as per the GST Act and provisions.
Held: The Hon’ble AAR of Maharashtra vide its Advance Ruling No. GST-ARA- 52/2018-19/B-160 dated December 19, 2018 stated with reference to Section 2(6) of GST Act which defines “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 recipient of service are not merely establishments of a distinct person in accordance with Explanation 2 in section 8.
However, NES Abu Dhabi, which is situated outside India and the Applicant satisfies all the ingredients of ‘export of services’ the service provided by the ‘MSA’ would qualify as an export of Taxable service. The relevant provisions of Section 16 of IGST Act is reproduced as “Section 16. (1) “zero rated supply” means any of the following supplies of goods or services or both, namely: – (a) export of goods or services or both; or……………………………………….”
Therefore, we observe that the applicant is an exporter of services under GST Act and the supply of services in the subject case as covered by the MSA agreement submitted it is very clear that the said transactions are covered under “Zero rated supply”.