2019 (7) TMI 43 - AAR - GST

Liability to pay tax under IGST Act or CGST and SGST? - Nature of supply - interstate or intra-state supply? - services provided to foreign clients i.e. situated outside India and for which the place of supply is in the taxable territory - Place of provision of services - HELD THAT - Though the location of the recipient is outside India, the services supplied are in respect of goods which are made physically available by the recipient of the services to the supplier of the services for the services to be performed. Thus the provisions of sub-section (3)(a) of Section 13 of IGST Act, 2017 are squarely applicable for the supply in the instant case - Since the place of supply is in taxable territory it is clear that the provisions of Section 2(6) of the IGST Act are not fulfilled in this case and therefore their supply cannot be considered as Export of Services as per the GST Law. Since the place of supply and the service provider are in the same State, CGST and SGST are payable for this transaction. In case it is ruled that IGST is payable, the procedure to be followed for payment of IGST as the GST portal does not permit the payment of IGST where the place of supply is indicated as state of Maharashtra? - HELD THAT - This question is not answerable as IGST is not applicable.

Summary

Issues Involved
1. Determining whether various services provided to foreign clients, with the place of supply in the taxable territory, are liable to IGST or CGST and SGST under the GST Law.
2. Procedure for payment of IGST if ruled payable, given the GST portal's limitations.

Detailed Analysis

Issue 1: Tax Liability on Services Provided to Foreign Clients
Question:
Determining whether the various services provided to foreign clients situated outside India, with the place of supply in the taxable territory, are liable to IGST or CGST and SGST under the GST Law.

Analysis:
1. Relevant Provisions:
- Section 9(1) of the CGST Act, 2017: Levies CGST on all intra-State supplies of services.
- Section 5(1) of the IGST Act, 2017: Levies IGST on all inter-State supplies of services.
- Sections 7 & 8 of the IGST Act, 2017: Determine the nature of supply based on the location of the supplier and the place of supply.
- Section 13 of the IGST Act, 2017: Determines the place of supply for services where either the supplier or recipient is outside India.

2. Applicant's Position:
- The applicant, M/s. Bilcare Ltd., provides services such as storage, distribution, and packaging to foreign clients.
- The location of the supplier is in Pune, Maharashtra, and the location of the recipient is outside India.
- According to Section 13(3) of the IGST Act, the place of supply for these services is in India, making it a taxable territory.
- The applicant contends that these services should be considered inter-State supplies and thus liable to IGST as per Section 7(5)(c) of the IGST Act.

3. Authority's Observations:
- The services provided involve goods physically available in India, making Section 13(3)(a) of the IGST Act applicable.
- Since the place of supply is in the taxable territory (India) and the supplier is also in the same state, the provisions of Section 2(6) of the IGST Act are not fulfilled.
- Therefore, the services do not qualify as export of services.
- Consequently, CGST and SGST are applicable as the place of supply and the supplier are in the same state.

Conclusion:
The various services provided to foreign clients are liable to CGST and SGST because the place of supply and the supplier are both in the state of Maharashtra, in accordance with Section 13(3)(a) of the IGST Act, 2017.

Issue 2: Procedure for Payment of IGST
Question:
In case it is ruled that IGST is payable, the procedure to be followed for payment of IGST as the GST portal does not permit the payment of IGST where the place of supply is indicated as the state of Maharashtra.

Analysis:
1. Applicant's Position:
- The applicant asserts that if IGST is applicable, they face technical issues on the GST portal, which defaults to intra-State supply (CGST and SGST) when Maharashtra is selected as the place of supply.
- The applicant seeks guidance on how to proceed with the payment of IGST given this technical limitation.

2. Authority's Observations:
- The authority did not address this issue in detail because it concluded that IGST is not applicable to the services in question.

Conclusion:
The question is not answerable since IGST is not applicable, and therefore, no procedure for payment of IGST is required.

Final Order
Order:
1. Question 1: The services provided to foreign clients are liable to CGST and SGST as the location of the supplier and the place of supply are in the same state, in terms of Section 13(3)(a) of the IGST Act, 2017.
2. Question 2: Not answered since IGST is not applicable.

Citation:
2019 (7) TMI 43 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA