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2020 (12) TMI 786 - AAR - GSTGoods or not - e-goods - sale/ supply within state - classification of services - rate of GST - exemption from GST or not - reverse charge mechanism - procurement from foreign supplier and supply from out of India - customer is from India and paying the consideration in dollar - exports or not - rate of SGST CGST or IGST - customer pays for the e goods in Indian rupees and goods delivered through CLOUD located outside India - customer / buyer is from out of India and payment is done in dollar - goods/ services are stored in CLOUD which are the servers outside India - not imported into India and the services are stored on CLOUD and therefore it cannot be said to be imports or not - rate of GST if RCM applicable. Whether e-goods , as commercially known in the market, are goods as defined in the GST Acts or are they services as per GST Act? - HELD THAT - In the subject case the e-goods, referred to by the applicant are online gaming , as stated by him during the course of Final Hearing. Section 2(17) of the IGST Act, 2017, defines online information and database access or retrieval services (OIDAR) as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services..(vii) Online Gaming'' - This definition will answer the first question posed by the applicant i.e. e-goods (in this case online gaming) will be considered as services under the GST Laws. If they are goods, what is the HSN classification and if services, what is the service classification and rate of GST on its sale/ supply within state? - Whether they are exempted from GST? - If Not exempted, what is the rate of GST on supply? - HELD THAT - The Code wise List of services finds mention in Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. In the subject case we find that the applicant is supplying online content services - the subject services i.e. online gaming falls under SAC 998439. All services covered under the Heading 9984 attract a GST rate of 18%. In what circumstances will IGST, under reverse charge, be applicable or whether it is applicable in the situation of procurement from foreign supplier and supply from out of India? - HELD THAT - There is a supply of OIDAR services to the applicant from suppliers based abroad. The nature of OIDAR services are such that it can be provided online from a remote location outside the taxable territory. A similar service provided by an Indian Service Provider, from within the taxable territory, to recipients in India would be taxable. In cases where the supplier of such service is located outside India and the recipient is a business entity (registered person) located in India, the reverse charge mechanism would get triggered and the recipient in India who is a registered entity under GST will be liable to pay GST under reverse charge and undertake necessary compliances. If the supplier is located outside India and the recipient in India is an individual consumer not registered under GST Laws, in such cases also the place of supply would be India and the transaction is amenable to levy of GST. In such case the individual should obtain registration and pay GST under reverse charge. If the customer is from India and paying the consideration in dollar, whether it will be allowed as exports or if not allowed as exports then whether GST is leviable? What is rate of SGST CGST or IGST? Under which HSN Code or SAC? - HELD THAT - In case applicant s customer is from India i.e. taxable territory. Hence, GST would be liable on such transactions. In the case of supply of taxable service the word consideration is the key. As per Section 2 ((31) of the CGST Act, 2017, Consideration, includes any payment to be made, whether in money or otherwise. If customer pays for the e goods in Indian rupees and goods delivered through CLOUD located outside India whether SGST CGST or IGST leviable on such transactions? - H ELD THAT - The applicant has not mentioned whether the said customer is located in India or abroad but since the applicant has mentioned that the payment is in Indian Rupees we assume that the customer is in India which is a taxable territory and since the applicant is also located in India, GST is leviable on such supply of services. Place of supply - In case where customer / buyer is from out of India and payment is done in dollar, according to us it is export of goods / services and therefore neither SGST CGST is leviable? Please clarify the same - HELD THAT - The clause (e) of Section 97 (2) of the CGST Act, 2017 has got a very wide connotation and would cover all sorts of transactions, where the Advance Ruling on the questions related to the determination of the liability to pay tax can be sought by the Applicant - the applicant is supplying OIDAR services in the subject case and as per the provisions of Section 13 (12) of the IGST Act, in such cases, the place of supply of online information and database access or retrieval services shall be the location of the recipient of services, in this case the customer who is located abroad. In the subject case, the applicant has not provided details mentioned in the aforesaid seven non-contradictory conditions and therefore we are not able to come to any conclusion with respect to place of supply i.e whether the recipient in the subject case is in non-taxable territory or is deemed to be located in taxable territory. Also, the applicant did not attend online hearings scheduled on 10.11.2020 and 01.12.2020 and requested for adjournment. The first request for adjournment in respect of online hearing dated 10.11.2020 was received from the applicant vide email dated 05.11.2020 and adjournment was granted. The second request for adjournment in respect of online hearing dated 01.12.2020 was not granted as already sufficient opportunities had been given to the applicant for presenting his case on the said issue - in view of details having not been submitted by the applicant, we are unable to answer this question. In case buyer is from India, the goods/ services are stored in CLOUD which are the servers outside India, therefore even though payment is received in rupees, it is again export of services being services are received from distantly installed servers. Hence No CGST and or SGST is leviable? - HELD THAT - In respect of this question, it is seen that the service is supplied by the applicant from taxable territory to recipients who are also located in taxable territory. The taxable event under GST Laws is supply of goods or services or both and the supplier of such goods or services or both, is liable to pay GST. In this situation since both, the supplier and recipient of services are located in taxable territory, the subject services will not be considered as exported and the applicant will have to discharge his GST liability on the amounts received for supplying such services. Whether IGST is applicable under section 5(3) 5(4) of the IGST Act, according to us it is not of because it is not imported into India and the services are stored on CLOUD and therefore it cannot be said to be imports and thus not liable for RCM? - If suppose RCM is applicable then its rate? - HELD THAT - The applicant is required to obtain registration and pay GST under reverse charge mechanism. We reiterate that IGST is applicable under section 5(3) 5(4) of the IGST Act at the rate mentioned in para 5.4.1 above i.e @18%.
Issues Involved:
1. Classification of "e-goods" under GST Acts. 2. HSN/SAC classification and GST rate for "e-goods." 3. GST exemption status for "e-goods." 4. GST rate on supply of "e-goods." 5. Applicability of IGST under reverse charge mechanism for procurement from foreign suppliers. 6. GST implications if the customer is from India and pays in dollars. 7. GST implications if the customer pays in Indian rupees and goods are delivered through CLOUD located outside India. 8. Clarification on export status and GST applicability if the customer is from outside India and payment is in dollars. 9. Clarification on export status and GST applicability if the buyer is from India but goods/services are stored in CLOUD servers outside India. 10. Applicability of IGST under Section 5(3) & 5(4) of the IGST Act. 11. Rate of IGST under reverse charge mechanism. Detailed Analysis: 1. Classification of "e-goods" under GST Acts: The authority concluded that "e-goods," specifically online gaming in this case, are considered as services under the GST Acts. This is based on Section 2(17) of the IGST Act, 2017, which defines 'online information and database access or retrieval services' (OIDAR) to include electronic services such as online gaming. 2. HSN/SAC classification and GST rate for "e-goods": The SAC classification for the service of online gaming falls under SAC 998439. All services under Heading 9984 attract a GST rate of 18%. 3. GST exemption status for "e-goods": The authority answered in the negative, confirming that "e-goods" are not exempted from GST. 4. GST rate on supply of "e-goods": The GST rate applicable on the supply of "e-goods" is 18%. 5. Applicability of IGST under reverse charge mechanism for procurement from foreign suppliers: The authority clarified that in the case of procurement from foreign suppliers, the applicant must discharge the IGST liability under the reverse charge mechanism. This is because the nature of OIDAR services allows them to be provided online from a location outside the taxable territory. 6. GST implications if the customer is from India and pays in dollars: The authority noted that since both the customer and the applicant are in India, GST would be applicable at 18% under SAC 998439. The transaction cannot be considered an export as the applicant has not provided necessary permissions/documents to transact in dollars. 7. GST implications if the customer pays in Indian rupees and goods are delivered through CLOUD located outside India: The authority assumed the customer is in India (taxable territory) since the payment is in Indian Rupees. Consequently, GST is leviable on such transactions. 8. Clarification on export status and GST applicability if the customer is from outside India and payment is in dollars: The authority could not answer this question due to insufficient details provided by the applicant regarding the non-contradictory conditions listed under Section 13(12) of the IGST Act, which are necessary to determine the place of supply. 9. Clarification on export status and GST applicability if the buyer is from India but goods/services are stored in CLOUD servers outside India: The authority concluded that since both the supplier and recipient of services are located in the taxable territory, the services cannot be considered as exported. Therefore, the applicant must discharge GST liability on the amounts received for supplying such services. 10. Applicability of IGST under Section 5(3) & 5(4) of the IGST Act: The authority confirmed that IGST is applicable under Section 5(3) & 5(4) of the IGST Act. The applicant needs to obtain registration and pay GST under the reverse charge mechanism. 11. Rate of IGST under reverse charge mechanism: The authority affirmed that IGST at the rate of 18% will be applicable under the reverse charge mechanism. Order: The authority provided detailed answers to each question posed by the applicant, confirming the classification, applicable GST rates, and the applicability of the reverse charge mechanism, among other issues. The key takeaway is that "e-goods" in the form of online gaming are considered services under GST, attracting an 18% GST rate, and the applicant must comply with GST regulations, including the reverse charge mechanism where applicable.
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