The Maharashtra Authority of Advance Ruling (AAR) held that the transfer of monetary proceeds via IVL India to the petitioner IVL Sweden shall be obligated towards the payment of the integrated goods and services tax beneath (the RCM) reverse charge mechanism.
The two-member bench of M. Rammohan Rao and T.R. Ramnani sees that excluding the service furnished via the petitioner to the Municipal Corporation of Greater Mumbai (MCGM), there would be little service furnished via IVL Sweden, situated outside India on the basis of the experience, credentials, and expertise, to the petitioner who is located in India that would enable the petitioner to function beneath the contract. Service would be supplied in the taxable territory i.e India and there is no doubt about the same.
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Under the laws of Sweden, IVL Sweden is made which is the foreign firm and the petitioner, IVL India Environmental R&D Pvt Ltd., is a company started under the laws of India.
The MCGM offered bids for a contract for “Project Management Consultancy Services” to 4 locations. IVL Swedish Environmental Research Institute ltd calculated the applications on the grounds of their credentials, work experience along with other distinct certifications obtained via distinct government companies as needed in the bidding eligibility criteria.
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Under the criteria of eligibility, the contract can merely get performed via a completely purchased subsidiary of the foreign firm, which moreover told that the parent firm in its capacity can not do the contract on a direct basis. Therefore IVL Sweden made IVL India so as to execute the contract and follow the conditions specified within the bid eligibility criteria. MCGM has provided the Letter of Award under the title of “IVL Sweden.”
The petitioner seeks the advance ruling on the dispute of whether only the monetary transfer proceeds via IVL India Environmental R&D PVT Ltd to IVL Swedish Environmental Research Institute Limited excluding the underlying import of service shall obligate for IGST payment beneath the GST RCM.
AAR sees that IVL Sweden is liable for the performance of the contract. The same would be provided that the primary consultant for the same contract is IVL Sweden.
AAR, as the petitioner obtains the support services via IVL Sweden situated in a non-taxable territory, the whole integrated tax imposed under section 5 of the Integrated Goods and Services Tax Act should be furnished on a reverse charge grounds via the recipient of these services. Hence petitioner is obligated to pay GST on the income that is being transferred to IVL Sweden.