2019 (10) TMI 872 - AAR - GST

Supply of services - supply of OIDAR services to customers in India - non-taxable online recipient - HELD THAT - The charge of tax on the supply of OIDAR services to a non-taxable online recipient would be on the service provider. In case of supply of any service by a person located in a non-taxable territory to any person other than non-taxable online recipient, the liability to pay tax rests on the person located in the taxable territory under reverse charge basis under Notification No. 10/2017-Central Tax (Rate) dated 28.06.2017 and such person is liable for registration compulsorily under Section 24(iii) of the CGST Act, 2017. The burden of proving that the a unregistered person located in the taxable territory has received OIDAR services for the purposes other than for business, commerce, industry or profession lies on the applicant.

Issues Involved:
1. Requirement to charge GST on supply of OIDAR services to unregistered persons in India.
2. Requirement to charge GST on supply of OIDAR services to Government, Local Authority, Governmental Authority, and individuals.
3. Determination of GST charge based on the purpose of OIDAR services used by recipients.
4. Method to determine the purpose of OIDAR services used by recipients.
5. Determination of purpose in case of Government, Local Authority, Governmental Authority, and individuals.
6. Adequacy of obtaining written confirmation from recipients to determine their category and claim to exemption under GST Law.

Detailed Analysis:

1. Requirement to charge GST on supply of OIDAR services to unregistered persons in India:
The applicant is required to charge GST on the supply of OIDAR services to unregistered persons in India if the services are used for purposes other than commerce, industry, business, or profession. This is in accordance with Section 24(xi) of the CGST Act, 2017, which mandates registration for suppliers of OIDAR services from a place outside India to a person in India, other than a registered person. The ruling confirms that the applicant must charge GST on such supplies to unregistered persons.

2. Requirement to charge GST on supply of OIDAR services to Government, Local Authority, Governmental Authority, and individuals:
The applicant is not required to charge GST on the supply of OIDAR services to Government, Local Authority, Governmental Authority, and individuals if they are registered under GST. The ruling clarifies that OIDAR services provided to registered entities are subject to reverse charge mechanism, and the liability to pay tax rests on the recipient.

3. Determination of GST charge based on the purpose of OIDAR services used by recipients:
The purpose for which the OIDAR services are used by the recipient in India is crucial in determining the GST liability. If the services are used for commerce, industry, or any other business or profession, the applicant is not required to charge GST. The ruling emphasizes that the applicant must ascertain the purpose of use to determine the taxability.

4. Method to determine the purpose of OIDAR services used by recipients:
The applicant must rely on obtaining written confirmation from recipients to determine whether the OIDAR services are used for purposes other than commerce, industry, business, or profession. The ruling acknowledges the challenge in determining the end-use but places the burden of proof on the applicant.

5. Determination of purpose in case of Government, Local Authority, Governmental Authority, and individuals:
The ruling states that this question is not applicable as the answer to the previous issue (C) is not affirmative. Therefore, the applicant does not need to determine the purpose of use for these entities if they are registered.

6. Adequacy of obtaining written confirmation from recipients:
The applicant is required to obtain written confirmation from recipients to determine their respective category under Section 2(16) of the IGST Act and to accept their claim to exemption under GST Law. The ruling places the responsibility on the applicant to prove that the OIDAR services received by unregistered persons were for purposes other than commerce, industry, or any other business or profession.

Conclusion:
The ruling provides clear guidelines on the GST liability for the supply of OIDAR services by the applicant. It emphasizes the importance of determining the registration status and purpose of use by recipients to ascertain the taxability. The burden of proof lies with the applicant to ensure compliance with GST provisions.

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