AAR Rules consideration in form of Preference Share for Export Services Does Not Fall Under Section 97(2) Scope:

AAR Rules consideration in form of Preference Share for Export Services Does Not Fall Under Section 97(2) Scope The present Gujarat Authority for Advance Ruling No. GUJ/GAAR/R/2025/57 has been sought by a company named M/s 63 Ideas Infolabs Private Limited (Applicant), having a registered address at 501, 5th Floor, Shapath 1, S.G. Highway, Bodakdev, Ahmedabad, Gujarat-380054. The applicant is registered under the GST Act, having GSTIN 24AAACZ8597LIZI. The personal hearing on the matter took place on September 24, 2025, and April 24, 2025. The company is involved in the wholesale business of selling agricultural produce and staples across India, primarily in the form of bulk distribution, through various networks. The business of the applicant is operated across 16 states and UTs. For the purpose of its business, the applicant had developed a supply chain management (SCM) platform, which can be accessed at its website and/or mobile app. The platform has made it easy the connection of farmers, producers, and brands to connect with retailers, enabling seamless sales of agricultural produce and staples.

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Question Asked by Applicant: Seeking the advance ruling, the applicant has asked the following question: "Question: Whether the receipt of consideration in the form of non-voting, irredeemable preference shares would fulfil the requirement of 'receipt of consideration' as referred to in Section 2(6)(iv) of the IGST Act, 2017, and therefore there will be no liability to pay GST on the supply of the said services (customization and licensing of the proprietary platform) by the applicant to the overseas client."

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Answer Given by Gujarat AAR: The following answer has been given by the Gujarat Authority for Advance Ruling (AAR) to the question asked by the applicant: Answer: As per the advance ruling, the question raised by the applicant does not fall under the ambit of Section 97(2) (as discussed in the official PDF of the ruling). However, on this point, the applicant had tried to argue that it had sought the advance ruling under Section 97(2) of the CGST Act, 2017, on the grounds that it is seeking the liability to pay GST on the supply of services by the applicant to the overseas client. But the key query asked by the applicant was whether the export proceeds in the form of preferential shares of the foreign entity fulfil the requirement of consideration, i.e., convertible foreign exchange, as mentioned in Clause (iv) of Section 2(6) of the IGST Act, 2017. Until this issue is settled, we cannot determine whether GST needs to be paid, and since the key question does not fall under the scope of Section 97(2), the authority for advance ruling does not answer the question.