The Authority on Advance Rulings in Karnataka has ruled that the Marketing and Pre-sales Technical Support Services will be classified as Intermediary services under the Section 2(13) of the Integrated Goods and Services Tax Act, 2017. The Authority also ruled that Post-Sales Technical Support Services provided will be classified as Information Technology Support Services falling under Service Code 998313.
The peculiar ruling was pronounced by a bench constituting of Hanish Dharnia and Dr. Ravi Prasad M.P. in an application filed by M/s ANSYS Software Pvt. Ltd under Section 97 of the CGST Act 2017 and KGST Act 2017.
In the particular case the applicant company was engaged in an agreement with its parent company, Ansys US, to provide Marketing, Pre-Sales and Post- Sales Technical Support Services for a fixed percentage of the Sales Order Value or on basis of any other mutually agreed mechanism.
The Authority noted that activities such as, understanding of the customer’s requirements, showcasing of the product to the customer and helping the customer to understand the functionality of product and its relevance, exploring new business opportunities with the existing customers, coordinating with the customer and parent company for signing of related documentation and collecting of Invoice value would amount to facilitation of the supply.
The Authority ruled that as it is mere facilitation of supply the applicant would be covered under the definition of an “intermediary. The Authority also ruled that the above activities would also come under the provision of Distributive trade services under Heading 996111.
In ruling the matter of Post-sale Technical Support Services, the Authority noted that “contract is between the end customers and the parent company in the US and the applicant is providing the services to the end-customers on behalf of the parent company and charging the parent company for the services provided. The consideration is also fixed as a percentage of the sales order value for the customer.” Hence the Authority ruled that the services provided are in providing support to the software supplied earlier and it would amount to provision of information technology services which is covered under Heading 9983 – Other professional, technical and business services and Group 99831 – Management Consulting and Management Services; Information Technology Services and Service Code 998313 – Information Technology consulting and support services.
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