IN RE: GUTAL TRADING EST. Vs. STATE

JUDGEMENT

(1.) IN this case an application under Section 245Q(1) of the IT Act, 1961, in Form No. 34C (meant for non -resident applicants) seeking advance ruling from the Authority has been filed on 14th May, 2004. The applicant is based at Dubai, UAE, and as per the law prevalent there, its legal status is "Individual Establishment". It holds a Licence No. 206898 owned by a local national Shri Matar Mohd. Matar, who is a non -resident in India. Gutal Trading Est. is an agent of Glaverbel S.A., Belgium, Glaverbel France, S.A., Puteaux, France, Glaverbel Nederland B.V., Netherlands, Glaverbel Italy, S.R.I., Italy, Glaverbel Czech A.S., Czech Republic, and Glavermas Pte Ltd., Singapore, hereinafter referred to as "principal company/GVB" by virtue of a consolidated agreement entered with the GVB.

(2.) THE scope of assignment of the applicant is to promote products of the "principal company/GVB", and to provide support to GVB for obtaining data related to the credit risk and credit rating of the customers or potential customers, as also to provide assistance for timely collection of outstanding dues from the customers. The agreement specifically states that the applicant is prohibited from concluding the contracts on behalf of GVB or collect payments on behalf of the "principal company". The applicant by itself cannot procure orders from the customers/potential customers, and does not have the authority to conclude negotiations in this regard. The essence of the above referred agreement is that all the business dealings are to be carried out by the customers/potential customers directly with the "principal company/GVB" and the assignment of the applicant Gutal Trading Est. (for short 'GTE'), is merely to disseminate the information about the products of the "principal company" and to provide direct support to GVB for obtaining data related to the credit risk and credit rating of the customers/potential customers and also to provide assistance for collecting the amount of outstanding dues from the customers. All the costs and charges that are required to be incurred/paid for this purpose are to be borne by the applicant. It is only after the executing of orders that the "principal company" may receive from the specific territory assigned to the applicant, that the applicant shall be entitled to lump sum commission at the pre -fixed rate as per paras 6.1 and 6.2 of the abovereferred agreement. The applicant (GTE) proposes to set up a "liaison office" (hereinafter referred to as "LO") in India for carrying out following activities;

(3.) IN respect of question Nos. 1, 2 and 3 the learned Counsel for the applicant vehemently argued that the applicant (GTE) was specifically prohibited from concluding the contracts on behalf of GVB or to collect payments on behalf of the "principal company" (Clausels. 3.7 and 3.8 of the agreement with the principal company/GVB), that the scope of assignment of the applicant in terms of the above referred agreement is to promote the products of the "principal company" and to provide support for obtaining data related credit risk and credit rating of the customers/potential customers which may be useful for timely collection of outstanding dues. That the applicant by itself cannot procure orders from the customers/potential customers and has no authority to conclude negotiations with them. The essence of the abovereferred agreement is that the customers/potential customers will enter into all the business dealings directly with the manufacturers, i.e., "principal company/GVB". The customers themselves shall be importers directly from the GVB, without involvement of the applicant (GTE), at all stages from placing orders, to the stage of taking delivery of goods and making payment It is only after execution of the order that the "principal company/GVB" might receive from the territory assigned to the applicant that the applicant shall be entitled to lump sum commission at a prefixed rate. '