Brand promotion of GoDaddy by its Indian subsidiary amounts to export of service

Facts

a) Assessee (‘GoDaddy India’) is an Indian subsidiary of GoDaddy US. It proposed to enter into an agreement to provide brand promotion and support services in India to GoDaddy US.

b) It sought advance ruling by contending that place of provision (POP) of services to be provided by it to GoDaddy USA is outside India. Therefore, it would not be liable to pay service tax in India.

c) Revenue on the other hand contended that service to be provided by the assessee is intermediary services which is to be consumed by Indian customers and as per POP rules, POP would be location of service provider i.e. India. Therefore, such services should not be treated as export of services.

The Authority for Advance Ruling held as under:

1) Services proposed to be provided by assessee cannot be treated as intermediary services as in the instant case, assessee would provide services to GoDaddy US and not 'on behalf' of GoDaddy US.

2) Further, GoDaddy US would be dealing with Indian customers directly and assessee would not be providing any service to Indian customer of GoDaddy. Hence, entire services would be provided with the sole intention of promoting brand of GoDaddy US and, thus, main service is 'supporting business of GoDaddy US in India'

3) Since services would be provided on principal-to-principal basis, its POP would be determined as per rule 3 which, inter-alia, envisages that the place of provision of a service shall be the location of the recipient of service.

4) Hence, services to be provided to GoDaddy US would qualify as export of taxable services in terms of rule 6A of the Service Tax Rules, 1994