GUJARAT AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

A/5, RAJYA KAR BHAVAN, ASHRAM ROAD,

AHMEDABAD - 380 009.

(IN APPLICATION NO. Advance Ruling/SGST&CGST/2022/AR/02)

Brief facts:

M/s. Indian Society of Critical Care Medicine (herein after referred to as ISCCM for the sake of brevity) submits that it is engaged in imparting educational training by developing and running Post - graduate fellowship courses & diplomas in the field of critical care medicine and providing basic training in intensive care for non-specialists.

2. ISCCM has submitted that for the purpose of upliftment and advancement of public at large, it is conducting a conference and exhibition in Ahmedabad in the month of February, 2021 with the name of CRITICARE. The applicant will organize and manage the conference and exhibition and it will be attended by delegates, vendors, exhibitors from all states of India including Gujarat and international vendors as well.

3. ISCCM will offer following facilities to the delegates in the event at an all inclusive registration fees:

a. Technical Theme - based Seminars b. Access to exhibition c. Interactive workshop and scientific session d. Hotel Room Accommodation e. Cultural programs, lunch & dinner f. Airport Pickup & Drop.

4. ISCCM has submitted that the interested local, national & international vendors will be offered to participate in the trade fair to showcase and exhibit their products against certain participation charges. Further, various brand promotion packages will be offered to local, national & international vendors in the course of the event.

5. ISCCM submits that bundle of services is being offered to the delegates; reference to the concept of 'composite supply' under CGST Act, 2017 is required:-

(30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

6. ISCCM has submitted that all the above supplies provided together to the delegates are taxable supplies. To determine natural bundling, Education Guide issued by CBEC in the year 2012 is referred which provided that whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which service relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below :-

a. The perception of the consumer or the service receiver;

b. Majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines;

c. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service.

d. Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are -

i. There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use;

ii. The elements are normally advertised as a package;

iii. The different elements are not available separately;

iv. The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected.

That above indicators being applied in the given case, it evidently appears that the supply made by ISCCM to the delegates is a composite supply.

10. Section 8 of Central Goods and Services Tax Act, 2017 provides as under:

The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:-

(a) Composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and

(b) Mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.

Hence, the composite supply provided by ISCCM to the delegates shall be treated as a supply of service of organization of conference.

11. The classification of services under GST is provided vide Annexure of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017, relevant extracts of the Annexure and Notification is as under:

Notification No. 11/2017 - Central Tax (Rate)

ISCCM understands that services by ISCCM to the delegates shall be classified under HSN 998596 taxable at the rate of 18%

12. ISCCM has submitted that as explained in the facts of the case, it will organize in the course of event, a trade fair also. The exhibitors will be allowed to display their products at a specified location in the trade fair venue, advertise their brand and products, distribute pamphlets or brochures etc. The consideration, i.e. exhibition participation fees will be paid by the exhibitors to ISCCM. ISCCM understands that the participation fee for exhibition is charged from the exhibitors against the service of organizing trade show. Hence such service shall be classified under HSN 998596 i.e., Events, exhibitions, conventions and trade shows organisation and assistance services and ISCCM shall be liable to pay tax at the rate of 18%.

13. Those categories of brand promotion packages will be offered in the following ways:-

(i) Branding on Stage Backdrop, Standby Taxi, E-Rickshaw, Chair Head, Rest Cover, Itinerary, Bottle Wrapper, Logo in media Stationery

(ii) Display of their brand in a souvenir for the event (space will be allotted in the souvenier)

(iii) Presentation (for a specific time slot) and DVD Display

13.1 ISCCM has submitted that the term 'brand promotion' in not defined under GST but reference can be made to service tax regime where service of brand promotion was a declared service and it was covered under Section 65(105) (zzzzq).

13.2 ISCCM submits that Brand promotion packages offered by it should be classified under HSN 998397 having description 'Sponsorship services and brand promotion services' taxable at the rate of 18%.

13.3 ISCCM has submitted that the above entry of classification covers both the services of sponsorship and brand promotion, but sponsorship service is specifically covered under services liable to tax on reverse charge basis under Section 9(3) of CGST Act, 2017 vide Notification No. 13/2017 - Central Tax (Rate), dated 28.06.2017.

13.4 ISCCM further submits that it understands that brand promotion packages offered by them to partnership firms and body corporate shall be classified under the same entry HSN 998397 having description 'Sponsorship services and brand promotion services' taxable at the rate of 18% and ISCCM shall be liable to pay tax on such services under normal charge only.

14. ISCCM has submitted that it will procure various supplies during the course of event including the following:-

I. Services by hotel including accommodation, conference venue and food & beverages;

II. Supply of food & beverages by outside caterers;

III. Services provided by event manager like pickup & drop, exhibition stall set-up, tenting, etc.

14 .1 It is submitted by ISCCM that hotel will be providing a bouquet of Services to the tourist like accommodation for the delegates, availability of conference hall and Food & beverages. The above bundle of services shall qualify as a composite supply by the hotel where accommodation service shall be the principal supply. Input Tax Credit of CGST and SGST charged by the hotel on the composite supply of accommodation service shall be available to ISCCM since such supply will be used in course of business and it is an eligible credit in terms of Section 16 of CGST Act, 2017.

15. ISCCM submit that in relation to input tax credit on food and beverages supplied by outside caterers, Section 17 (5) provides that ITC of tax paid on food and beverages shall be available to them because ISCCM will use such inward supply as an element of an outward supply of event organization which is a taxable composite supply.

16. It is submitted by ISCCM that in relation to rent-a-cab service, the provisions mentioned in Section 17(5) provides for eligibility of input tax credit. Since they will use such inward supply of rent-a-cab service as an element of outward supplies of event organization and brand promotion which are taxable composite supplies, it is understood that ITC of tax paid on rent-a-cab service shall be available to it.

17. Question on which Advance Ruling sought

1. What shall be the nature of service and classification in accordance with Notification No. 11/2017- CT(R), dated 28.06.17 read with annexure attached to it in relation the following services:-

a. Service provided by ISCCM to the delegates;

b. Service provided by ISCCM to the exhibitors.

2. In relation to the brand promotion packages offered by ISCCM in the course of the event,-

a. What shall be the nature of service and classification in accordance with Notification No. 11/2017-CT(R), dated 28.06.17 read with annexure attached to it?

b. Whether ISCCM is liable to pay tax on services provided to the brand promoters or the liability to pay tax on such services falls on recipient under reverse charge according to Notification No. 13/2017 -Central Tax (Rate)?

3. Whether Input Tax Credit is admissible for ISCCM in respect of tax paid on the following:-

a. Services provided by the hotel including accommodation, food & beverages;

b. Supply of food and beverages by outside caterers;

c. Services provided by event manager like pickup & drop, exhibition stall set-up, tenting, etc.

Personal Hearing

18. Virtual hearing granted on 22-3-22 was attended by Shri Gaurav Sain, and Shri Hetang Pandya and they reiterated the submission.

Revenue's Submission

19. Revenue has neither submitted its comments nor appeared for hearing.

FINDINGS

20. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act.

21. We note that ISCCM in its application cited that the said Conference to be held in February 21. When inquired regarding this, during personal hearing, Shri Hetang Pandya clarified that the said conference is slated for April 2022.

22. ISCCM supply to delegates

i. As per the brochure submitted, this Conference is for researchers, professors and doctors on topics of intensive care and the workshops will be revisiting the clinical practices, new technologies and drugs as well as the current initiatives to deal with pandemic and post pandemic scenario of critical care. The conference to be attended by physicians and Intensivist features the following workshops:-

(i) Comprehensive Critical Care Course

(ii) CAM-ICU: Comprehensive Airway Management in ICU

(iii) Intensive Care Ultrasound

(iv) Essentials and Fundamentals of Mechanical Ventilation

(v) Essentials and Fundamentals of Mechanical Ventilation

(vi) Advanced Neuro Trauma & Critical care Support

(vii) Multiorgan (Extra Corporeal) Support & Therapy

(viii) Mechanical & Extracorporeal Cardiac Support & Therapy

(ix) Critical Communication & Soft Science

(x) Research & Statistical Methodology

(xi) Critical Learning Evaluation & Training Methodology

(xii) Basics of Resuscitation & Trauma Response

(xiii) Safety, Quality, Accreditation & Prevention of Errors

(xiv) Nursing.

ii. We note that ISCCM supplies a composite package to its delegates, at an all inclusive registration fees, comprising of the following services: Technical Seminars, Access to exhibition, Hotel Room Accommodation, Cultural program, lunch & dinner, Airport Pick Up & Drop. We agree with ISCCM that the bouquet of services being provided to its delegates is a composite supply. During hearing, Shri Hetang Pandya informed that the delegates shall be Doctors and from health care field. We note that the principal supply of ISCCM to its delegates attending the conference is imparting knowledge/ workshops on topics of medical field. For this very reason the delegates desire to attend the conference and not merely for supporting services such as hotel accommodation or air port pick up and drop. We hold that Professional Service supply is the essence of the package of services supplied by ISCCM to its delegates and is thereby the principal supply by ISCCM to its delegates.

23. ISCCM supply to Exhibitors

ISCCM is organizing trade fair and exhibition. Its exhibitors showcase and exhibit their products/ services. The participation fees charged by ISCCM on these exhibitors is for the service of organizing exhibition for the exhibitors which finds entry at SAC 998596 under 'events, exhibitions, conventions and trade shows organisation and assistance services'

24. Tax Liability for showcasing name/logo/brand of other persons by ISCCM.-

i. We hold that a suitable place for any entity to promote itself is at sponsored events such as trade fairs, exhibitions and events such as subject Criticare conference. Such entities are benefitted immensely by highlighting themselves before prospective customers in the said criticare conference. These companies pay consideration to ISCCM and in return get their name/ logo/ brand on stage Backdrop, Standy, Taxi, E-Rickshaw, Chair Head, Rest Cover, Itinerary, Bottle Wrapper, Logo in media, Stationery etc.; Display of their brand in a souvenir for the event (space will be allotted in the souvenir); Presentation (for a specific time slot) and DVD Display. The essence of this service is Sponsorship Service.

ii. ISCCM supplies Sponsorship services to its respective customers which finds entry at SAC 998397 under the category of 'Sponsorship services and brand promotion services'. We note that with regard to sponsorship service GST liability is on Reverse Charge Mechanism on the service recipient when the recipient is located in the taxable territory, vide Notification 13/2017- CT(R) dated 28-6-17. We find the supply in this regard to be Sponsorship service supply and dismiss ISCCM's submission that this supply is brand promotion supply.

25. Admissibility of ITC by ISCCM

i. We find it relevant to quote the illustration quoted in CBIC Flyer no 4 dated 5-8-2019, as follows:-

'Illustrations -

i. A hotel provides a 4-D/3-N package with the facility of breakfast. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as service of providing hotel accommodation.

ii A 5 star hotel is booked for a conference of 100 delegates on a lump sum package with the following facilities:'

Accommodation for the delegates

Breakfast for the delegates,

Tea and coffee during conference

Access to fitness room for the delegates

Availability of conference room

Business centre

As is evident a bouquet of services is being provided, many of them chargeable to different effective rates of tax. None of the individual constituents are able to provide the essential character of the service. However, if the service is described as convention service it is able to capture the entire essence of the package. Thus, the service may be judged as convention service and chargeable to full rate. However, it will be fully justifiable for the hotel to charge individually for the services as long as there is no attempt to offload the value of one service on to another service that is chargeable at a concessional rate.'

ii. As such, Hotel's principal supply to ISCCM is Convention Service. We dismiss ISCCM's submission that hotel's principal supply is accommodation service supply.

iii. Either the hotel raises an itemised bill or a single price bill, ITC is admissible on all items such as convention, accommodation, food & beverages.

iv. Also, ITC on food and beverages supplied by outside caterers is eligible vide Section 17(5)(b)(i) of CGST Act, which reads as follows:-

'(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely :-

(b) the following supply of goods or services or both -

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance :

Provided that the input tax credit in respect of such goods and services or both shall be available where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply.'

The ITC of tax paid on food and beverages will be available to ISCCM because as ISCCM receives this service from Hotel/ Caterer, it uses this service for making an outward taxable supply as an element of taxable composite supply to its delegates.

v. Rent-a-cab service ITC to ISCCM

The Cabs have approved seating capacity of not more than 13 persons (including the driver). This service is supplied to ISCCM and ISCCM further supplies it as a part of composite supply to the delegates and thereby the proviso to Section 17(5)(b)(i) CGST Act is satisfied for admissibility of this ITC.

vi. In terms of Section 16(1) CGST Act, Exhibition stall set-up and tenting is an input service to ISCCM used in its business, thereby its ITC is admissible.

24. In conspectus of aforementioned Discussion and Findings, We pass the Ruling,

RULING

1(a) ISCCM supplies Composite Supply to its delegates, the principal supply being Professional Service supply. SAC is 998399.

1(b) ISCCM supplies 'Exhibition, Trade show organization and assistance services' to the exhibitors. SAC is 9985 96.

2(a) ISCCM supplies Sponsorship Services to its sponsors. SAC is 9983 97.

2(b). GST liability on sponsorship service is on the service recipient (if the recipient is a body corporate or partnership firm) if the recipient is in taxable territory. If the service recipient is not a body corporate/ firm, then GST is liable to be paid by ISCCM on forward charge.

3 ITC, as per Question 3 of the Application, is admissible to ISCCM.