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TMI BlogService rendered to foreign companyX X X X Extracts X X X X X X X X Extracts X X X X ..... I have a query where one Indian company is serving a foreign company as an agent for procuring goods from overseas and selling the goods to India, the outgoing payment and incoming payment is effected to the foreign company and the Indian company is charging services in respect to the buying and selling arrangement. Is the Indian company liable to charge gst on such services or not since the service is export oriented being served to a foreign entity in foreign currency without any value addition of the goods in India or anywhere. - Reply By KASTURI SETHI - The Reply = Ultimately enjoyment of service is in India Hence taxable. - Reply By MARIAPPAN GOVINDARAJAN - The Reply = It is taxable. - Reply By Varsha Baid - The Reply = Thanks f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or your reply. But still I have a doubt that beneficiary is foreign company and services rendered is outside India. India company is only acting as an agent of Foreign company in UAE to facilitate the supply and delivery of goods and they are not serving any Indian entity. Money related to goods is also received in UAE. There is no cash transaction in India. Agents are getting their commission in foreign currency in dollars. Is still applicable for GST - Reply By Ramaswamy S - The Reply = Yes Taxable. Regards S.Ramaswamy - Reply By KASTURI SETHI - The Reply = Only receipt of foreign exchange for India would not suffice There are so many other factors to determine whether it is export of service or not. - Reply By Varsha Baid - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply = Place of supply of service is also outside India. Can you please provide the relevant section to refer. - Reply By Ganeshan Kalyani - The Reply = It is taxable. - Reply By Rajagopalan Ranganathan - The Reply = Sir, According to Section 2 (6) if IGST Act, 2017 export of services means the supply of any service when, (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with Explanation 1 in section 8 . Explanation 1 of Section 8 of IGST Act, 2017 stipulates that- For the purposes of this Act, where a person has, (i) an establishment in India and any other establishment outside India; (ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. In my opinion conditions (i) to (iv) of Section 2 (6) of IGST Act, 2017 are satisfied and hence what you are doing is export of servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and according to Section 16 (1) of IGST Act, 2017 is zero rated supply. hence you need not pay any gst. - Reply By KASTURI SETHI - The Reply = Query and cross query do not match. There is a difference between the language of both. It sometimes happens. - Reply By KASTURI SETHI - The Reply = At first the querist said, Selling the goods to India . - Reply By Ganeshan Kalyani - The Reply = Selling goods in India is taxable whereas the service which the querist provide to foreign company being an export of service is exempted. I guess experts commented on the goods part. - Reply By KASTURI SETHI - The Reply = Dear Sh.Kalyani Ji,. Due to improper drafting of query, situation is fluid and hence not cannot be said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is doubt free. - Reply By Ganeshan Kalyani - The Reply = Sri Kasturi Sir, i totally agree with you. The query drafting is very important because experts present their views based on the same. The background of the issue, present difficulty and question should be apparent.Thanks - Reply By KASTURI SETHI - The Reply = Dear Sh.Kalyani Ji,. I want to further share with you on this issue. Procurement of purchase order is a Supply of Service. And selling the goods is supply of goods. In this case both are not independent. They are completely intermingled. - Reply By Varsha Baid - The Reply = Thank u for your responses. I am putting the query in a more detailed way : A Uae company hires an agent in india who is arranging the supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from Europe and USA and the subsequent selling arrangements to Indian customers. The shipments are coming from Europe/USA ports to Indian ports, there is nowhere agent's involvement in stocking or adding any value to such goods in India or anywhere. The deliveries of goods are taken by the customers upon payment to the uae company. The Indian agent is simply facilitating the sales for uae company as an agent directly from European Port. - Reply By KASTURI SETHI - The Reply = In view of revised query by the querist , I am of the view that export of service is here and supply of goods is from non-taxable territory to non-taxable territory. Hence GST is not applicable. - Reply By Varsha Baid - The Reply = Sir can you please provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me the relevant section to refer non taxable territory. Please guide me how we are considering Europe and India as non taxable territory so that I can have much clear view. - Reply By KASTURI SETHI - The Reply = Your further query has been received through email but not in this forum. - Reply By Varsha Baid - The Reply = Posting same again as you said this came in email and not in forum Sir can you please provide me the relevant section to refer non taxable territory. Please guide me how we are considering Europe and India as non taxable territory so that I can have much clear view. - Reply By KASTURI SETHI - The Reply = Who is the owner of the goods ? Whether ownership transferred ? How are you mentioning 'India' when agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in India only facilitated the purchase and sale in foreign country ? Are you mentioning India on the basis of consignment passed through Indian Territory ? Were the goods unloaded in Indian territory ? I have not mentioned 'India' as non-taxable territory ? - Reply By Ganeshan Kalyani - The Reply = What is the model of transaction? - Reply By KASTURI SETHI - The Reply = As per Section 2(79) of CGST Act non-taxable territory means the territory which is outside the taxable territory; e.g. any foreign country etc. Commission Agent cannot be owner of goods. He is only intermediary only. Also read the concept of High Sea Sales. - Reply By KASTURI SETHI - The Reply = Also read this Notification 10/2017-IG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST(Rate) dated 28.6.17 Sl. No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 1 Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. Any person Located in a non-taxable territory Any person located in the taxable territory other than non-taxable online recipient 10 Services supplied by a person located in non-taxable territory by way of transportation of goods by a ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssel from a place outside India up to the customs station of clearance in India. A person located in non-taxable territory Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962) , located in the taxable territory. - Reply By CS SANJAY MALHOTRA - The Reply = All experts have correctly placed their views that the activity is taxable. Refer to the provisions of IGST Act, section 13(8) (b) which is applicable in your case as service provider being you and recipient is based in different country. Place of provision of service is the place of service provider in case of intermediary, hence service by whatever name you call i.e Agent, Commission is subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o GST. The same in no way treated as export of service. GST is leviable. - Reply By KASTURI SETHI - The Reply = Sh.CS Sanjay Malhotra Ji,. Sir thanks for finalisation of the issue. All doubts stand cleared now. The querist must be satisfied now. - Reply By ANITA BHADRA - The Reply = Dear Sir / Madam In my view it is not export of services in the light of following provisions of IGST Act 2017 :- Section 7(5) of IGST Act which provides Supply of goods or services or both, ( a ) when 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 Zon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unit; or ( c ) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. A plain reading of above provisions imply that where the location of supplier( service provider) is in India and place of supply is outside India it would be regarded as interstate supply and therefore fall under purview of section 5 of IGST act and hence leviable to IGST . the provisions related to levy of GST on services which have place of supply outside India but does not qualify as export. Further , you are working as an intermediary and P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of supply for intermediary will be the location of the intermediary in case recipient / service provider is outside India .. Since place of supply (of your services ) is not outside India , it is not export of services as per Section 2(6)(iii) of IGST Act . Experts are requested to correct if I am wrong . Regards CA Anita Bhadra - Reply By KASTURI SETHI - The Reply = Sh.Sanjay Malhotra, CS has never been wrong since my introduction in this forum.So we can trust in his replies with out buts and ifs. - Reply By Archna Gupta - The Reply = In your case the Indian company is working as an agent of foreign company whose job is to facilitate the transaction in goods between foreign supplier and Indian customer. Your compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny is charging service charges/ commission from foreign company. The transaction value of goods is directly impacting the foreign company's bank account. Your services will be treated as intermediary services and in case of intermediary services place of supply is Location of supplier . Actually in order to determine, whether the supply is Intra State supply or Inter State supply, two factors are involved and they are (1) Place of supply, (2) Location of supplier. If both are in same state then supply is 'Intra State and if they are in different State , the supply will be 'Inter State supply' Now come back to your case. In your case the supply is intermediary services. In Intermediary services the place of suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y will always be the 'Location of supplier (Please refer Section 13(8)(b) of IGST Act, 2017 ). So the both factors are 'Location of supplier' and you will charge CGST+SGST. Your services will not be covered in Export of Services because the place of supply is India. - Reply By vijay kumar - The Reply = In my view, there are two supplies involved - (i) supply of goods and (ii) supply of service. As regards supply of goods by the UAE company to an Indian entity directly (and not through the agent, as per the query), is an import by the Indian entity and accordingly IGST will attract, apart from BCD. As regards supply of agency service by your company to the UAE company, please refer to Section 13 (8)(b) r/w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 2(13) of the IGST Act, 2017 . Yours being an intermediary service, the place of supply is the location of the supplier of service, which is in India, it would be taxable and you are liable to pay IGST. The export of service criteria, to the extent of place of supply is not satisfied in your case and hence it cannot be treated as export of service. - Service rendered to foreign company - Query Started By: - Varsha Baid Dated:- 16-11-2017 Goods and Services Tax - GST - Got 29 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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