Service rendered to foreign company
Query (Issue) Started By: – Varsha Baid Dated:- 16-11-2017 Last Reply Date:- 18-12-2017 Goods and Services Tax – GST
Got 29 Replies
GST
I have a query where one Indian company is serving a foreign company as an agent for procuring goods from overseas and selling the goods to India, the outgoing payment and incoming payment is effected to the foreign company and the Indian company is charging services in respect to the buying and selling arrangement.
Is the Indian company liable to charge gst on such services or not since the service is export oriented being served to a foreign entity in foreign currency without any value addition of the goods in India or anywhere.
Reply By KASTURI SETHI:
The Reply:
Ultimately enjoyment of service is in India Hence taxable.
Reply By MARIAPPAN GOVINDARAJAN:
The Reply:
It is taxable.
Reply By Varsha Baid:
The Reply:
Thanks for your reply. But still I have a doubt that beneficiary is foreign company a
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ier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.
Explanation 1 of Section 8 of IGST Act, 2017 stipulates that-
For the purposes of this Act, where a person has,
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory,
then such establishments shall be treated as establishments of distinct persons.
In my opinion co
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use experts present their views based on the same. The background of the issue, present difficulty and question should be apparent.Thanks
Reply By KASTURI SETHI:
The Reply:
Dear Sh.Kalyani Ji,. I want to further share with you on this issue. Procurement of purchase order is a Supply of Service. And selling the goods is supply of goods. In this case both are not independent. They are completely intermingled.
Reply By Varsha Baid:
The Reply:
Thank u for your responses.
I am putting the query in a more detailed way :
A Uae company hires an agent in india who is arranging the supplies from Europe and USA and the subsequent selling arrangements to Indian customers. The shipments are coming from Europe/USA ports to Indian ports, there is nowhere agent's involvement in stocking or adding any value to such goods in India or anywhere. The deliveries of goods are taken by the customers upon payment to the uae company. The Indian agent is simply facilitating the sales for uae company
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wnership transferred ? How are you mentioning 'India' when agent in India only facilitated the purchase and sale in foreign country ? Are you mentioning India on the basis of consignment passed through Indian Territory ? Were the goods unloaded in Indian territory ? I have not mentioned 'India' as non-taxable territory ?
Reply By Ganeshan Kalyani:
The Reply:
What is the model of transaction?
Reply By KASTURI SETHI:
The Reply:
As per Section 2(79) of CGST Act “non-taxable territory” means the territory which is outside the taxable territory; e.g. any foreign country etc.
Commission Agent cannot be owner of goods. He is only intermediary only.
Also read the concept of High Sea Sales.
Reply By KASTURI SETHI:
The Reply:
Also read this
Notification 10/2017-IGST(Rate) dated 28.6.17
Sl. No.
Category of Supply of Services
Supplier of service
Recipient of Service
(1)
(2)
(3)
(4)
1
Any service supplied by any person who is located in a non-taxable territ
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e same in no way treated as export of service.
GST is leviable.
Reply By KASTURI SETHI:
The Reply:
Sh.CS Sanjay Malhotra Ji,. Sir thanks for finalisation of the issue. All doubts stand cleared now. The querist must be satisfied now.
Reply By ANITA BHADRA:
The Reply:
Dear Sir / Madam
In my view it is not export of services in the light of following provisions of IGST Act 2017:-
Section 7(5) of IGST Act which provides " Supply of goods or services or both,
(a)
when the supplier is located in India and the place of supply is outside India;
(b)
to or by a Special Economic Zone developer or a Special Economic Zone unit; or
(c)
in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.
A plain reading of above provisions imply that where the location of supplier( service provider) is in India and place of supply is outside I
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plier and Indian customer. Your company is charging service charges/ commission from foreign company. The transaction value of goods is directly impacting the foreign company's bank account.
Your services will be treated as intermediary services and in case of intermediary services place of supply is "Location of supplier".
Actually in order to determine, whether the supply is Intra State supply or Inter State supply, two factors are involved and they are (1) Place of supply, (2) Location of supplier. If both are in same state then supply is 'Intra State" and if they are in different State , the supply will be 'Inter State supply'
Now come back to your case. In your case the supply is intermediary services. In Intermediary services the place of supply will always be the 'Location of supplier" (Please refer Section 13(8)(b) of IGST Act, 2017). So the both factors are 'Location of supplier' and you will charge CGST+SGST.
Your services w
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