July 20, 2024


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AAAR Quashes Progress Ruling Versus Myntra on 18% GST on Sale of World wide web Marketing Space

AAAR Quashes Progress Ruling Versus Myntra on 18% GST on Sale of World wide web Marketing Space
AAAR Quashes Progress Ruling Versus Myntra on 18% GST on Sale of World wide web Marketing Space

The Karnataka Appellate Authority for Progress Ruling ( AAAR ) has quashed an progress ruling versus on line apparel system Myntra whereby the AAR held that 18% GST leviable on the sale of web ad space.

The Appellant, Myntra is an e-commerce operator engaged in the organization of providing clothes and way of living merchandise by means of its portal. The Appellant has offered house on its website portal for advertisements of a overseas entity for which it receives consideration. Myntra had approached the Progress Ruling Authority for a ruling on no matter if the activity of delivering area for ads of a overseas entity is taxable and if so what is the classification and fee of tax of the transaction with the overseas entity that the Authority experienced supplied a ruling on the classification of assistance and charge of tax but had refrained from providing a ruling on the taxability of the exercise.

Just before the Appellate Authority, Myntra contended that even however the Authority had held that all other conditions for export of company were being pleased, they did not give a ruling on spot of source on the grounds that dedication of tax legal responsibility will entail analyzing the provisions of position of supply which is not a matter lined under Area 97(2) of the Central GST Act.

A coram of Associates Ms. Ranjana Jha and Ms. Shikha C observed that the solutions offered by them qualifies in all respects as an ‘export of service’. There is no disagreement with the findings of the Advance Ruling Authority that they meet up with the conditions in clauses (i), (ii), (iv) and (v) of Portion 2(6) of the IGST Act which defines ‘export of service’ that they also satisfy ailment (iii) of the definition in as significantly as the area of supply is outside the house India and they justified this by relying on Segment 13(2) of the IGST Act which they declare is applicable in their case. He submitted that no other sub-section in Segment 13 applies to them.

Whilst remanding the issue back to the AAR, the Appellate AAR held that “A simple examining of the over reveals that dedication of place of source is not a subject issue included under Part 97(2) of the CGST Act. Nevertheless, the Appellant has strongly relied on the Kerala Substantial Court conclusion in the situation of Sutherland Home loan Services Inc vs Principal Commissioner noted in 2020 (35) G.S.T.L 40 whereby it was held by the Large Court docket that even although the problem relating to dedication of area of supply is not expressly enumerated in any of the clauses as for each clauses (a) to (g) of Portion 97(2) of the CGST Act, the situation relating to perseverance of spot of supply, would occur inside the ambit of the much larger challenge of ‘determination of legal responsibility to fork out tax on any goods or solutions or both’ as envisaged in clause (e) of Area 97(2) of the CGST Act.”

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In Re: M/s. Myntra Design and style Pvt. Ltd.

Quotation:   2023 TAXSCAN (AAAR) 102