GST: Person liable to pay consideration for Supply of Services is ‘Recipient’ of such supply, says AAAR [Read Order]

The Appellate Authority of Advance Ruling (AAAR) ruled that the person liable to pay consideration for the supply of services is ‘Recipient’ of such supply and ‘Consideration’ is any payment made whether by the recipient or any other person for such supply.

The Appellant, Rajesh Rama Varma has been contracted by M/s Doyen Systems Private Ltd. to provide professional and consultancy services to be carried out through them and that, he had rendered software support services to the client of M/s Doyen Systems Private Ltd, IRM in the United States of America and is paid in rupee equivalent of US Dollars on hourly basis at agreed rates by Doyen systems after approval of invoice and client timesheet.

The point of contention is that the appellant claims that the skill-based services provided by him is ultimately consumed by the client of Doyen Systems for which he is paid by Doyen Systems who have contracted him is an export of services provided by the appellant while the Original authority has held that the appellant has a contract only with Doyen systems who pays the consideration to him, after verifying the timesheet of the appellant with their client and the services provided by the appellant are intra-state supply to Doyen Systems taxable to CGST or SGST.

The applicant sought the advance ruling on the issue of whether the service provided by the appellant is a supply of services under the CGST/TNGST Act or IGST Act.

The AAR the lower Authority the payment of ‘Consideration’ to the appellant is entirely with the Doyen Systems and the appellant cannot claim consideration directly with the client of Doyen Systems or the client of Doyen Systems is not the person liable to pay the appellant for the services supplied by the appellant. Thus, it is clearly evident that the recipient of the Services of the appellant is Doyen Systems.

The two-member bench of M.A. Siddique and K.V. Krishna Rao while upholding the ruling of the lower authority ruled that the statute is unambiguous in as much as it says, the person liable to pay the consideration for the supply of services is the ‘Recipient’ of such supply and ‘Consideration’ is any payment made whether by the recipient or any other person for such supply.

“It is not disputed that the appellant is under contractual obligation to Doyen Systems to provide services through ‘Doyen Systems’ for which Payment is agreed to be made by Doyen Systems to the appellant after verifying the invoice and the client time-sheet as in the Contract Agreement,” the AAAR said.