The Karnataka Appellate Authority of Advance Ruling (AAAR) ruled that ‘A la carte’ services relating to employee relocation is neither a composite nor a mixed supply.
The Appellant, Cartus India Private Limited is a private limited company, engaged in the supply of ‘Relocation Management Service’ to its clients located in India, which primarily involves facilitation/ administration/ management of relocation of client’s employees from one location to another.
The arrangement between the Appellant and its client is based on the fundamental principle that such Relocation Management Service is primarily for facilitation of smooth transition of the client’s employees and/ or his family to another location. To ensure the smooth transition of employees, the client chooses the services that are offered by the Appellant. Further, the number of services to be procured by the client from the Appellant, is determined on the basis the requirement of client’s employees and various other factors viz. employee title, family makeup, to/from location etc.
The Appellant approached the authority for Advance Ruling (AAR) seeking a ruling on the question that whether the gamut of services collectively referred to as “Relocation Management Service” provided by the applicant would constitute a composite supply or a mixed supply for the purpose of taxability under GST.
The AAR vide its order gave ruling that the services supplied by the applicant do not constitute a composite supply and would be a mixed supply, when the services are billed for a single price in case where the relocation related services are actually provided by them. The services provided to the company as an agent are “management support services of relocation related services” which is a single service covered under SAC 9985 and is covered under entry 23(H) of Notification No 11/2017-Central Tax (Rate) dated June 28, 2017.
The Appellate Authority consisting of members D.P. Nagendra Kumar and M.S. Srikar modified the Advance Ruling Order and ruled that The package of bundled services supplied by the appellant for a single price in terms of the Relocation Management Service agreement (RSA) and Statement of Work (SOW), is a mixed supply in terms of Section 2(74) of the CGST Act, 2017 and the taxability of the mixed supply will be determined in terms of Section 8 (b) of the said Act.
“The ‘a la carte’ services provided by the appellant, relating to employee relocation is neither a composite supply nor a mixed supply in view of our discussions above. The observations made by the Lower Authority in the impugned order to the effect that the service provided by the appellant is covered under the definition of “intermediary’ is expunged as being beyond the mandate of the Authority in the instant case. We make it clear that the above ruling is based on and limited to the activity carried out by the appellant under the RSA and the SOW referred in this order,” the AAAR said.
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