2019 (10) TMI 751 - AAR - GST

Zero-rated supply - Whether the activity of on the technical testing services carried out by the applicant be treated as 'zero-rated supply'? - HELD THAT - In the instant case, the goods on which technical testing is carried out are made available to the applicant in India and are not exported back to the recipient. Hence the exclusionary clause under Section 13(3),(a) is not applicable to the instant case. The activity of technical testing on goods is carried out in Goa, India. Hence the place of supply of service is rightly determined as per Section 13(3) of the IGST Act, 2017 which is the location of the supplier of the service i.e. Goa, India - Since the place of supply of service is in India, condition (iii) under Section 2(6) of the IGST Act, 2017 is not fulfilled. Hence the service provided by the applicant doesn't falls within the definition of export of service as defined under Section 2(6) of the IGST Act, 2017. Since the supplier of service is in Goa, India and place of supply of service as determined under Section 13(3)(a) is also in Goa, India, the applicant is liable to pay CGST and SGST on the aforesaid supply of service.

Summary

Issues:
1. Whether the technical testing services carried out by the applicant can be treated as 'zero-rated supply'?
2. If the answer to the first question is negative, is the applicant liable to pay IGST on the said supply?

Analysis:

Issue 1:
The applicant sought an Advance Ruling to determine if the technical testing services they provide can be considered as 'zero-rated supply.' The definition of export of service under Section 2(6) of the IGST Act, 2017 was crucial in this analysis. To qualify as an export of service, certain conditions needed to be met, including the location of the supplier and recipient of service, place of supply, and payment in convertible foreign exchange. The ruling highlighted that while some conditions were fulfilled, the place of supply of service, determined under Section 13 of the IGST Act, was crucial. As the technical testing was carried out in Goa, India, the place of supply was considered to be in India, leading to the conclusion that the service did not meet the criteria for export of service under the IGST Act, 2017. The ruling also clarified that the exclusionary clause under Section 13(3)(a) did not apply in this case, further supporting the decision.

Issue 2:
In response to the second issue raised by the applicant, the ruling stated that since the supplier of service and the place of supply were both in Goa, India, the applicant was deemed liable to pay CGST and SGST on the supply of service. This decision was based on the provisions of the CGST and SGST Acts, as well as the specific circumstances of the case where the services were provided and consumed within India.

In conclusion, the Authority for Advance Ruling, Goa, determined that the technical testing services provided by the applicant did not qualify as zero-rated supply under the IGST Act, 2017. Consequently, the applicant was held liable to pay CGST and SGST on the said supply of service due to the location of the supplier and the place of supply being within India.