Inter Vs. Intra, Goods and Services Tax - GST

[ShaikhAbdulSamad Ahmad]

Mr. India provides intermediary service to non resident company. As per section 13 of the IGST Act, 2017 states that PoS is place of provider of service, which destine it as Intra state. However, section 7(5)(c) of the IGST Act, 2017 colour the transaction as Inter state. Kindly clarify, whether it is Intra or inter.

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

You are providing intermediary service to non-resident company. Can you specify whether the non-resident company has any office or permanent establishment in India? If the non-resident company has its office or permanent establishment in India and such office/establishment is located in a State other than the State in which service provider is located then it will be inter-state supply.

If the service provider and the non-resident company has its office or permanent establishment in the same State then it will be intra-state supply.

Under sub-section (5) of Section 7 of IGST Act, 2017 " Supply of goods or services or both shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce provided -

(a) the supplier is located in India and the place of supply is outside India;

(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section."

According to Section *8 (2) of IGST Act, 2017 " supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply."

[Alkesh Jani]

Sir,

First of all, Section 7 of IGST Act, 2017, is with regards to “Inter-State supply”. The Section 7 (5)(c) states that “(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section”, and “taxable territory is defined at Section 2 (22) which is “(22) “taxable territory” means the territory to which the provisions of this Act apply;”. On cumulative reading it clears that provisions of this Act applies only to India and not the foreign land. Here it is important to note that taxable territory includes, terrestrial water, i.e. sea and sea bed even.

Further, Section 13 (1) of IGST Act, 2017, reads as “(1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India”. Even on plain reading it implies that supplies are received or supplied by the person located outside India (in simple words imported by an Indian importer), it shall be treated as inter-state and IGST is to be paid.

Our experts may correct me if mistaken.

Thanks

[ShaikhAbdulSamad Ahmad]

Dear Rajagopalan Sir,

The Non Resident company does not have any PE in India.

Thanks in advance

[Rajagopalan Ranganathan]

Sir,

According to Section 13 (2) of IGST Act, 2017 " the place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services."

Since you have stated that the non-resident company does not have PE in India the supply of service will amount to export of service. Export of service can be done without payment of IGST under letter of undertaking/bond or on payment of IGST which can be claimed as refund.

[Alkesh Jani]

Sir,

I request our experts to review on following grounds;

The intermediary services provided by Mr. is not falling under the ambit of exports, as the said services are performed in India. Further, Section 13 (8) (b) of IGST Act, clearly specifies the intermediary services and also specifying the place of supply as the location of service provider, which is India in the instant case.

Our experts may correct me if mistaken.

Thanks

[Rajagopalan Ranganathan]

Sir,

Section 13 (8) (b) of IGST Act, 2017 stipulates that " the place of supply of services shall be the location of the supplier of services in the case of intermediary services." Therefore in the case of intermediary service though the receiver of the supply is outside the taxable territory . in such a situation whether igst or cgst+sgst is leviable. In my opinion since the service receiver is outside taxable territory igst is payable.

[PAWAN KUMAR]

As per my view, two options are as under:-

1-As per Igst act, if there is no physical presence of recipient in taxable territory then place of supply will be location of supplier, therefore liable for cgst,sgst being intra state supply.

2-In case of purely intermediary services, in such case place of supply will be lication of supplier, thus liable for cgst, sgst being intra state supply.

[Alkesh Jani]

Sir,

In my point of view, supply of goods or services, to be treated as intra-state, it shall satisfy the conditions of Section 8 (1) of IGST Act 2017, which reads as under

" 8. (1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply...."

In the instant case, as the receiver is not within the same state, it does not qualifies the above conditions, so it cannot be treated as intra-state, hence, IGST is payable.

Our experts may correct me if mistaken.

Thanks