TaxandTrade

Taxation of Offshore Supplies – Is Composite/Turnkey nomenclature fatal? AAR 1218 of 2011 Taxability of EPC contracts continues to engage the tax payer and the department despite the Supreme Court laying down the principles in Ishikawajima Harima Heavy Industries judgement in (2007) 288 ITR 408 (SC).   In the instant case, the Applicant was a tyre-manufacturing company and engaged its overseas associated enterprise to supply equipment and supervise the installation of the equipment.   Accordingly, an Umbrella Agreement was entered into for offshore supply of equipment, followed much later by a Services agreement for supervision of installation.   Contending that the two were part of a composite contract, Revenue sought to tax the offshore supply portion in addition to the services portion on the basis that the contracts have to be ‘looked at’ as composite and turnkey and that the supplier was defacto responsible for installation too.      D...

Formula One – A formula that went wrong! In this post, I do not intend to go into the factual matrix of the case, coming as it does, more than 9 months after the decision. The post is prompted by the earlier post on AAR in Production Resource Group – a ruling that followed the Supreme Court in FOWC. Here, you will find judgements, opinions and commentaries referred by the Supreme Court in concluding that even a 3 day racing ( preceded by a week and succeeded by 2 weeks) can constitute a PE.  Comments and Analysis are at the end! Philip Baker The [PE] concept marks the dividing line for businesses between merely trading with a country and trading in that country; if an enterprise has a PE, its presence in a country is sufficiently substantial that it is trading in the country. In the first type of PE, i.e. associated permanent establishments, primary requirement is that there must be a fixed place of business through which the business of an enterprise is wh...

PE under Article 5(1) – degree of permanence relative to the nature and requirement of business carried on -   Need not be forever Even before the discussion on the 2017 decision of Supreme Court on FOWC could die,  the AAR in Production Resource Group [ 1330/2012 dated 8 Nov 2017] had occasion to deal with a similar issue involving a Belgian Applicant that rendered turnkey services of providing technical equipment and services for CWG events. Observing that the Applicant was allocated exclusive office  under the lock and key of the Applicant  and onsite space by the Owner,  the Authority found that even a limited presence for 114 days was sufficient to constitute PE under Article 5(1) as ‘ the establishment need not be enduring or permanent in the sense that it should be in its control forever in order to constitute a PE and that the length of time has to be necessarily tied to the nature and requirements of the business under consideration.’   The ...