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.
\nIs 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.
\nReply By KASTURI SETHI:
\nThe Reply:
\nUltimately enjoyment of service is in India Hence taxable.
\nReply By MARIAPPAN GOVINDARAJAN:
\nThe Reply:
\nIt is taxable.
\nReply By Varsha Baid:
\nThe Reply:
\nThanks for your reply. But still I have a doubt that beneficiary is foreign company a<\/p>\n
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\n (ii) the recipient of service is located outside India;
\n (iii) the place of supply of service is outside India;
\n (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
\n (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.
\n Explanation 1 of Section 8 of IGST Act, 2017 stipulates that-
\n For the purposes of this Act, where a person has,
\n (i) an establishment in India and any other establishment outside India;
\n (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
\n (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory,
\n then such establishments shall be treated as establishments of distinct persons.
\n In my opinion co<\/p>\n
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\nReply By KASTURI SETHI:
\nThe Reply:
\nDear 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.
\nReply By Varsha Baid:
\nThe Reply:
\nThank u for your responses.
\nI am putting the query in a more detailed way :
\nA 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 <\/p>\n
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\nReply By Ganeshan Kalyani:
\nThe Reply:
\nWhat is the model of transaction?
\nReply By KASTURI SETHI:
\nThe Reply:
\nAs 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.
\nCommission Agent cannot be owner of goods. He is only intermediary only.
\nAlso read the concept of High Sea Sales.
\nReply By KASTURI SETHI:
\nThe Reply:
\nAlso read this
\nNotification 10\/2017-IGST(Rate) dated 28.6.17
\nSl. No.
\nCategory of Supply of Services
\nSupplier of service
\nRecipient of Service
\n(1)
\n(2)
\n(3)
\n(4)
\n1
\nAny service supplied by any person who is located in a non-taxable territ<\/p>\n
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\nGST is leviable.
\nReply By KASTURI SETHI:
\nThe Reply:
\nSh.CS Sanjay Malhotra Ji,. Sir thanks for finalisation of the issue. All doubts stand cleared now. The querist must be satisfied now.
\nReply By ANITA BHADRA:
\nThe Reply:
\nDear Sir \/ Madam
\nIn my view it is not export of services in the light of following provisions of IGST Act 2017:-
\nSection 7(5) of IGST Act which provides " Supply of goods or services or both,
\n(a)
\nwhen the supplier is located in India and the place of supply is outside India;
\n(b)
\nto or by a Special Economic Zone developer or a Special Economic Zone unit; or
\n(c)
\nin 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.
\nA plain reading of above provisions imply that where the location of supplier( service provider) is in India and place of supply is outside I<\/p>\n
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\nYour services will be treated as intermediary services and in case of intermediary services place of supply is "Location of supplier".
\nActually 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'
\nNow 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.
\nYour services w<\/p>\n
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