• Rajesh Rama Varma (‘the Applicant’) is engaged in the business of providing IT software related consulting services in the area of Oracle ERP
• Doyen Systems, India (‘the Principal’) entered into a contract with the US client for provision of Oracle ERP related Consultancy services (‘the First Contract’). For executing a portion of the said contract, the Principal entered into a contract with the Applicant (‘the Second Contract’)
• Under the Second Contract, the Applicant was required to provide Oracle ERP related support services directly to US client. Key aspects of the said contract are as under :

Ø    Such support services directly to the US client shall be provided from the Principal’s office premise;

Ø    Timesheet on the hours worked during the month to be provided monthly to enable billing to the US client;

Ø    Consolidation of the Applicant’s timesheet with that of the Principal’s employees working on the project;

Ø    The Applicant’s communication with the US client is only for Oracle and not any administrative issues

·     At the end of the month, the Applicant raised an invoice on the Principal for consultancy fee with GST @18%

• Whether the services provided by the Applicant shall be treated as local services or export of services?
• Whether the Applicant is liable to pay GST on such services provided to the US client directly?
• Whether the benefit of zero-rated supply can be availed by the Applicant for services rendered?
• Whether the Applicant is eligible for refund of ‘taxes already paid in the past If the refund is within the time limit provided under the Central Goods and Service Tax Act, 2017 (‘the CGST Act’)?

• ‘Recipient’ of supply of goods or services or both means where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration
• ‘Agent’ means a person who carries on the business of supply/ receipt of goods/ services on behalf of another

·       The AAR held that consultancy services provided by the Applicant to the Principal is liable to GST on account of the following:

• The recipient of service for the Applicant is the Principal (located in India) and not the US client, since the payment to the Applicant and other approvals for timesheets are made by the Principal. Moreover, the Applicant is neither a party to the First Contract nor is he privy to it
• The US client pay the consideration to the Principal independently under the First Contract which has no relevance/ reference to the Second Contract
• The Applicant is not providing support services to the US client in the capacity of an agent (of the Principal) since the same is not substantiated by any documentary proof. Mere email correspondence with the US clients doesn’t imply that the Applicant is providing services on behalf of the Principal and qualify as an ‘agent’
• Services provided by the Applicant to the Principal satisfies the conditions of Section 7(1)(a) and is a supply under CGST Act. In light of Para 5 of Schedule II read with Section 7(1A) of the CGST Act, the same is supply of services

·       The AAR observed that the questions whether, such supply of services is ‘export of services’, ‘‘zero-rated supply’ and eligibility of refund cannot be answered since the same are not in the ambit of Advance Ruling provisions