2020 (3) TMI 894 - AAR - GST

Levy of IGST - Export of services - Reverse Charge Mechanism - intermediary services or not - eligibility of Input Tax Credit - Provision in GST Returns to Show the transactions - IGST from Customer not collected and is absorbed as Cost-impact on the transaction value. Do export of services attracts IGST under RCM? - HELD THAT - The Reverse Charge Mechanism is nothing but shifting the tax liability on to the receiver. In the instant case the applicant is, undoubtedly, a supplier and hence the question of levy of IGST on export of services, under RCM , does not arise. Do the services considered as Intermediary Service? - HELD THAT - In the instant case the applicant acts as an agent, in terms of the aforesaid agreements, to the parent company Fom Industrie s.r.l, Italy as well as M/s. Universal Pack s.r.l, Italy beyond doubt. Therefore the supply of services of the applicant under these transactions squarely falls under the Intermediary services and thereby the supply is in the taxable territory and thus the said supply is taxable, under forward charge mechanism. Is IGST paid under RCM eligible for ITC? - HELD THAT - The levy of IGST is only on the inter-state supplies and importation of goods/services is treated as inter-state supply, in terms of Section 7(2)/7(4) of the IGST Act 2017 respectively. The IGST is levied on import of goods, as part of customs duty, and collected under The Customs Act 1962. The IGST paid on clearance of imported goods by the applicant is available for ITC to the applicant. Further import of services attract IGST and the concerned importer has to discharge the said levy under RCM, which is also available for ITC to the importer of services. In the instant case the applicant is not importing any services and hence payment of IGST under RCM does not arise. Provision/ s in GST returns to show the transactions of the applicant - also, no IGST collected from the Customer and is absorbed as Cost-impact on the transaction value - HELD THAT - No rulings are given in respect of fourth and fifth questions, as they do not get covered under Section 97(2) of the CGST Act 2017 and hence out of the jurisdiction of this authority.

Summary

Issues:
1. Export of services under IGST Reverse Charge Mechanism
2. Classification of services as Intermediary Services
3. Eligibility of IGST paid under RCM for Input Tax Credit
4. Provision in GST returns for transactions display
5. Impact of not collecting IGST on transaction value

Analysis:
Issue 1: Export of services under IGST Reverse Charge Mechanism
The applicant sought a ruling on whether their export of services attracts IGST under RCM. The Authority clarified that as the applicant is a supplier, the question of levying IGST on export of services under RCM does not arise.

Issue 2: Classification of services as Intermediary Services
The applicant in question was involved in various business activities, including acting as an agent for parent companies in Italy. The Authority found that the applicant's activities fell under Intermediary Services, as they acted as agents facilitating the supply of goods between parties, making their services taxable under the forward charge mechanism.

Issue 3: Eligibility of IGST paid under RCM for Input Tax Credit
The Authority explained that IGST is levied on inter-state supplies and importation of goods/services, making it available for Input Tax Credit to the importer. As the applicant was not importing any services, the payment of IGST under RCM did not apply in this case.

Issue 4: Provision in GST returns for transactions display
The applicant raised a query about the provision in GST returns to display transactions. The Authority clarified that this query was not within the scope of issues for seeking an advance ruling under the CGST Act 2017.

Issue 5: Impact of not collecting IGST on transaction value
The applicant also provided information about not collecting IGST from customers, which impacted the transaction value. The Authority stated that this information did not fall under the jurisdiction of the advance ruling authority as per the CGST Act 2017.

In conclusion, the Authority ruled that the export of services by the applicant did not attract IGST under RCM, their services were classified as Intermediary Services taxable under the forward charge mechanism, and IGST paid under RCM was not applicable since the applicant was not importing any services. The queries regarding GST return provisions and the impact of not collecting IGST were deemed outside the authority's jurisdiction.