Allow Cookies!
By using our website, you agree to the use of cookies
The High Court in a ruling on Thursday held that the supply of services by ‘intermediaries’ outside India is not an export and hence it would attract GST of 18%.
The petition was filed by an association of recycling industry, claiming refund of IGST paid on services provided by them to their clients located outside India. They challenged the constitutional validity of Section 13(8)(b) of the Integrated Goods and Services Act, 2017.
After Section 2(6) and 2(13) of IGST Act, 2017 are read together, which defines export of service and intermediary services respectively, it can be concluded that the person who is intermediary cannot be considered as exporter of services, because he is just an agent who is facilitating the supply of good or services.
Section 13(8)(b) of IGST Act includes the location of supplier of service as place of supply so as to attract CGST and SGST. The HC said that merely because the invoice is raised against a foreign party, and foreign exchange is received in India it does not qualify as export of services and specially when the legislature has considered the place of supply to be the place of person who provides such service in India.
The petitioner then contended that it would amount to double taxation. But the bench pointed out that the services provided by the petitioner would not be taxable for the recipient of such service, because the commission paid by the recipient would be entitled to get deduction by way of expense.
The bench held that if the service provided by intermediary is not taxed in India, then it won’t be taxed anywhere outside India.
Therefore, it can be said that the provision of Section 13(8)(b) read with Section 2(13) of the IGST Act, 2017 are not ultra vires or unconstitutional.
86540
103860
630
114
59824