"MAHARASHTRA AUTHORITY FOR ADVANCE RULING GST Bhavan, Ist floor, B-Wing, Mazgaon, Mur bai — 400010. (Constituted under Section 96 of the Maharashtra Goods and Services Tax Act, 2017) BEFORE THE BENCH OF (1) Ms. P. Vinitha Sekhar, Addl. Commissioner of Central Tax, (Member) (2) Mr. A. A. Chahure, Joint Commissioner of State Tax, (Member) GSTIN Number, if any/ User-id 27AAHFL9362K1ZQ Legal Name of Applicant Lear India Engineerir.g LLP Registered Address/Address provided while obtaining user id Corresponding Address Gat.No. 426/6/7,8,9, Chakan-Talegaon Road, Mahalunge, Pune, 410561 Lear Corporation, 2nd Floor, E-25,26,27 , MIDC, Bhosari, Pune, Maharasntra, 411026 Details of application GST-ARA, Applicatior. No. 25 Dated 09.07.2019 Concerned officer Nature of activity(s) (proposed / present) in respect of which advance ruling sought on 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017> advance ruling in respect of the following questions. A_| Category Service Provision , Sevice Recipient B_| Description (in brief) Services provided for conduct of examination Issue/s on which advance ruling | (v) determination of the liability to pay tax on any | required : goods or services or bo.h Question(s) on which advance ruling is | As reproduced in para £1 of the Proceedings below. required | PROCEEDINGS P esent application has been filed under Section 97 of the Central Goods and Services Tax-Act; 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as 26ST Act and MGST Act”] by M/s. Lear India Engineering LP, the applicant, seeking an Ts Whether the design & Development services provided © Lear India to Lear entities situated abroad would amount to Export of service. 2. Whether the design & Development services provided + y Lear India to Lear entities situated aboard would fall under the category of OIDAR services. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to ‘he earlier, henceforth for the purposes of this Advance Ruling, a reference to “GST Act” would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION — AS PER THE APPLICANT The submissions made by the applicant are as under:- 2:1 Lear India Engineering LLP (hereinafter referred to as “Applicant”) is engaged in providing research and development services in resvect of various automotive applications to its overseas group companies. 2.2. The subject application is filed in respect of the Technical services provided by Applicant in respect of seating systems and electronic control units to service recipients situated outside India. Applicant entered into a technical assistance agreement with the other Lear entities situated abroad as per which, the Applicant is requied to perform activities such as engineering, R&D and technical assistance including atvanced product and process development, product design and product engineering. The intangible that are developed as a result of these activities are owned by the Service recziver and in consideration for providing such services, the Applicant is charging based cn the number of hours spent along with certain agreed reimbursements. Applicant has bifurcated the activities performed in lieu of the aforementioned agreement wo divisions, namely: *Seivig Division; and °E “Systems Division. In the Seating Division, the Applicant carries out development of design of seats and seat rts aS per the requirement of the customer. Applicant's team conceptualizes the design rawing or technical illustrations in computer environment using various computer software including Computer Aided Design software upen completion of which, the Applicant checks whether such design meets the requirement of the customer or not. For this, Applicant uses computer graphic simulation tech iologies which enables the Applicant to create 3-D graphic simulations that replaces fa‘ ricated prototypes. The entire testing is carried out in virtual environment, no prototyp<3 are ever received from the service receiver for testing purposes. Once the design is tested and approved in India, the same is stored on the server of the customer for verification and approval. In case the customer has any suggestions, comments, etc. the design is again modified by the Applicant and above referred process is reiterated. Once the design is finally approved by the customer, the activity of Applicant is concluded. In the subject case there is no import of prototype from the service receiver for testing purposes. This activity was being treated by the applicant as export of service under the Service Tax Laws. 2.5 In the E-Systems Division, applicant develops Electronic Control Units (“ECU\") as per the requirements of its customers. ECU is a composite box which controls various electronic functions of the car such as power window, audio system, wiper, auto lock, lighting, etc. These are embedded systems and control she electrical sub-systems that are present in a transport vehicle. On receipt of orders from Original Equipment Manufacturers (OEM) to develop ECU, the concerned Overseas Lear entity places back to back orders to different Lear entities (including the Applicant) for developing software for each of the operations which are controlled by ECU as mentioned above. Generally, the whole work is divided among multiple entities depending upon their available capacity to ensure that the development of ECU is completed in < defined timeline as per the requirement of the end customers. Out of the entire lifecycle for development of integrated software, initial 5-6 weeks are attributed towards development of function specific software by each Lear entity including the Applicant “vho are participating in the development project. Upon completion of the function specific development of software, the last 2-3 weeks are allocated for verification of functioning of integrated software and ‘compatibility with the hardware on which it would be loaded. During the process of lopment of functional software, post conceptualizing the software. i.e. after {pletion of writing of the software codes, the Applicant does carry out the testing of the! Aseniware to verify the accuracy of software. The said testing is done in the computer ee ees SGstem only, without the help of any external hardware. Then the function specific — software developed in India is uploaded on the server of Lear upon successful testing thereof. Similarly, other Lear entities which are assigned the task to develop software in respect of other functions of ECU also carry out the deve!pment of software which is allocated to them and the said patches of the software for other functions are also uploaded on the common server of Lear. The above said process of development of function specific software is explained with the help of example hereinafter: Example: In case of developing software for an ECU, Applicant is assigned the task to develop software pertaining to power window. Similarly, other Lear !ocations are assigned the task of developing software for wiper, steering, audio system, auto lock, lighting, etc. The respective Lear locations including the Applicant would upload the functional software developed by them on the common server within the define timeline agreed. 3 2.6 SIN 2.8.1 Once the functional software developed by each Lear entities are uploaded on the Lear server, the said software is integrated together by the overseas Lear entity which has placed order with other Lear entities. Such integration of all the functional software is important to test their performance and identify the problems if any faced in the interface between such functional software after integration. The integrated software is thereafter uploaded on the Lear server which is downloaded by each location who have developed the functional software. Thereafter, such integrated software is loaded on a hardware i.e. ECU which is supplied by overseas Lear entity, to carry out the testing of respective functional software in the overall integrated software. Further, the purpose of sending the common hardware to all the Lear locations is to provide the uniform platform on which the software is to be uploaded for testing purposes. The applicant neither has the capacity nor undertakes any testing operations on the hardware so supplied by its customer. The whole purpose of sending the hardware to provide uniformity in the platform on which the entire software has to work once it is installed in the vehicle. This activity was also treated by the Applicant as export of service under the Service Tax Laws. The applicant has made various submissions to state that the present services fall under the purview of \"Export of Services” and thus seeks the present advance ruling to understand whether the present services provided by the :-Applivant would fall under =xport of service” under the GST laws. w e letter dated 23.01.2020 Applicant has submitted thst it is withdrawing the first quéstion posed in its Advance Ruling Application i.e. Whether the design & development Be ? osefvices provided by Lear India to Lear entities situated ab-oad would amount to Export .