2022 (1) TMI 354 - AAR - GST

Export of services or not - services rendered for foreign companies (which do not have any business place/agency in India) in India - services provided in respect of goods that are being exported - place of supply of services - HELD THAT - The recipient of services provided by the applicant is a foreign buyer of Indian goods. The applicant performs services in relation to goods located or under manufacture in the territory of India on behalf of the foreign buyer. The liability to tax in this situation is governed by the place of supply rules as enumerated under Section 13 of the IGST Act, 2017. This Section deals with place of supply of services where location of supplier or location of recipient is outside India - In the instant case, the location of the recipient is outside India however the location where the services are actually performed in respect of goods is in the Country. Therefore the place of supply of services provided by the applicant are within the Country and hence liable to SGST CGST in the State of Telangana.

Summary

Issues:
1. Determination of whether services rendered for foreign companies in India are considered as exports.
2. Clarification on whether services provided in respect of goods being exported are also considered as export of services.

Analysis:
1. The applicant, a company providing inspection services, sought clarification on the tax liability of services rendered to foreign clients for goods intended for export. The Authority for Advance Ruling (AAR) admitted the application after verifying the payment of fees and ensuring the questions were not previously decided by any authority under the GST Act.

2. The key questions raised by the applicant were: (a) Whether services provided to foreign companies in India are considered exports, and (b) Whether services related to goods intended for export are also classified as export of services. During the personal hearing, the applicant's representatives explained the nature of their business and the specific services provided.

3. In its discussion and findings, the AAR examined the place of supply rules under Section 13 of the IGST Act, 2017. It determined that the location of the recipient being outside India, while the services were performed in India, meant that the services provided were within the country. Consequently, the services were deemed liable for State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) in the State of Telangana.

4. The ruling provided by the AAR clarified that services rendered for foreign companies in India were not considered exports, as the place of supply was within the country, making them liable for SGST and CGST. The second question regarding services provided in relation to goods being exported was answered in conjunction with the first question, emphasizing the tax liability based on the place of supply rules discussed in the judgment.