2024 (11) TMI 326 - AAR - GST

Levy of GST - revenue paid by the principals outside India - HELD THAT - It is found that the revenue is earned on different services provided in different situations and needs to be answered separately. GST is applicable on the intermediary services provided by the applicant in India and Sri Lanka. However, the intermediary service rendered in Sri Lanka stands exempt under Notification No. 20/2019-Integrated Tax (Rate) dated 30-09-2019 subject to conditions of the notification. If those conditions are satisfied by the applicant, they would stand eligible for the same. The installation service provided by the applicant in India is taxable - The installation services done by the applicant in Sri Lanka merit to be treated as an export of service, subject to satisfaction of all the conditions laid down in section 2 (6) of the IGST Act for it to be treated so.

Summary

Issues:
- Whether GST is applicable on the revenue paid to the applicant by their principals outside India?

Analysis:

1. Applicant's Contentions:
The Applicant, engaged as an agent of foreign companies for promoting products used in the tire and rubber industry, sought clarification on the tax liability under different scenarios involving promotion and subsequent services of products supplied by foreign principal companies to customers in India and Sri Lanka. The Applicant highlighted the nature of services provided, payment received in foreign currency, and considered these transactions as export services.

2. Jurisdictional Officer's Comments:
The Officer opined that the services provided by the Applicant are intermediary services and do not qualify as export of services as per the provisions of the IGST Act. The Officer emphasized that the place of supply of services by the Applicant to customers in India and Sri Lanka is to be treated as the location of the service provider, i.e., India.

3. Discussion and Findings:
The Advance Ruling Authority analyzed the activities of the Applicant, distinguishing between intermediary services provided and installation services conducted in India and Sri Lanka. It was established that the Applicant acts as an intermediary between the foreign principal and customers, falling under the definition of 'Intermediary Services' as per the IGST Act. The installation services were classified under Service Code Heading 9987.

4. Ruling Issued:
- Intermediary services provided in India and Sri Lanka are taxable, with an exemption for services in Sri Lanka under Notification No. 20/2019-Integrated Tax (Rate) subject to specified conditions.
- Installation services in India are taxable.
- Installation services in Sri Lanka may be treated as an export of service, subject to fulfilling conditions outlined in the IGST Act.

The ruling clarified that GST is applicable on intermediary services provided by the Applicant, except for services in Sri Lanka under the mentioned exemption. Installation services in India are taxable, while those in Sri Lanka may qualify as an export of service, contingent upon meeting the specified conditions.