Whether Advance Ruling Authority can determine issue relating to Place of Supply

Facts of the case

• The Company (Sutherland Mortgage Services Inc) is operating in a special economic zone unit in India.
• It is a branch office of a foreign company. It provides information technology-enabled services to customers located outside India.
• The customers are of head office and such service is rendered by the branch office in light of intra company agreement entered into by the said branch with the principal company incorporated in USA.
• It had applied for advance ruling before Kerala Advance Ruling Authority to determine whether services provided to such customers would be liable to GST.
• However, the Authority did not entertain the application because the question involves determination of place of supply which is not included in section 97(2) of the CGST Act.
• Aggrieved by the view taken by the Authority, company filed a writ petition before Kerala High Court

Issue

• Whether supply of services by India Branch of Sutherland Mortgage Services Inc. USA to the customers located outside India shall be liable to GST in the light of the intra company agreement entered into by the said branch with the principal company incorporated in USA?

Kerala High Court Ruling

• Section 97(2) of CGST Act provides questions in respect of which advance ruling can be sought. The said section is reproduced below :

(2) The question on which the advance ruling is sought under thisAct, shall be in respect of,–

(a) classification of any goods or services or both;

(b) applicability of a notification issued under the provisions ofthis Act;

(c) determination of time and value of supply of goods or services or both;

(d) admissibility of input tax credit of tax paid or deemed tohave been paid;

(e) determination of the liability to pay tax on any goods orservices or both;

(f) whether applicant is required to be registered;

(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supplyof goods or services or both, within the meaning of that term.

• High Court observed Clause (e) which covers “determination of liability to pay tax on any goods or services or both”.
• High Court observed that Parliament in its wisdom has decided to mandatesuch a provision as in clause (e) of Sec. 97(2), whereby the applicant is empowered to seek advance ruling even on the larger issue of determination of liability to pay tax on goods or services.
• High Court remarked that in the instant case, it is true that the issue relating to determination of place supply is not expressly enumerated in any of the clauses as per clauses (a) to (g) of Sec. 97(2) of the CGST Act, but there cannot be any two arguments that the said issue relating to determination of place of supply, which is one of the crucial issues to be determined as to whether or not it fulfills the definition of place of service, would also come within the ambit of the larger of issue of “determination of liability to pay tax on any goods or services or both” as envisaged in clause (e) of Sec. 97(2) of the CGST Ac.
• Thus, High Court held that the view taken by AAR is legally wrong faulty and is liable to be quashed.
• Further, the Court sent back the application to the AAR for fresh consideration and decision in accordance with law.