Technical testing services performed in India constitute intra-state supply under Section 13(3)(a) regardless of foreign recipient location

AAR Goa ruled that technical testing services performed on goods physically available in India constitute intra-state supply under Section 13(3)(a) of IGST Act, 2017, regardless of recipient's foreign location or report delivery abroad. The place of supply is determined by where services are actually performed, not recipient's location. Since both supplier and service performance were in Goa, CGST and SGST apply instead of IGST. Zero-rated export classification was denied. Previous service tax regime precedents held inapplicable under GST law. Appeal rejected.

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Issues Involved:
1. Whether the activity of technical testing services carried out by the appellant be treated as 'zero rated supply'.
2. Whether the appellant is liable to pay IGST or CGST and SGST on the said supply of services.

Issue-Wise Detailed Analysis:

Issue 1: Zero Rated Supply
Relevant Provisions and Definitions:
- Section 16 of the IGST Act, 2017 defines 'zero rated supply' as including the export of goods or services.
- Section 2(6) of the IGST Act, 2017 defines 'export of services' with five conditions:
1. Supplier located in India.
2. Recipient located outside India.
3. Place of supply outside India.
4. Payment received in convertible foreign exchange or Indian rupees (where permitted by RBI).
5. Supplier and recipient are not merely establishments of a distinct person.

Appellant's Argument:
- The appellant argued that their activity qualifies as research and development (R&D) service, and the place of supply should be outside India based on Section 13 of the IGST Act. They emphasized that the ultimate deliverable is the test report sent to the recipient outside India.

Authority's Findings:
- The lower Authority found that the service does not fulfill condition (iii) of 'export of services' since the place of supply is in Goa, India, as per Section 13(3)(a) of the IGST Act, which states that the place of supply for services involving goods physically made available by the recipient is the location where the services are performed.
- The Authority held that the services do not fall within 'export of services' and thus are not 'zero rated supply'.

Appellate Authority's Decision:
- The Appellate Authority upheld the lower Authority's decision, stating that the statutory provisions are clear and unambiguous. The place of supply is where the services are actually performed, which is in Goa, India. The appellant's argument regarding the test report being the ultimate deliverable was found to be irrelevant under the clear statutory language.

Issue 2: Tax Liability (IGST vs. CGST and SGST)
Relevant Provisions:
- Section 13(3)(a) of the IGST Act, 2017: Place of supply for services involving goods physically made available by the recipient is where the services are performed.
- Section 8(2) of the IGST Act, 2017: Defines intra-state supply of services.
- Section 7(5)(c) of the IGST Act, 2017: Defines inter-state supply of services.

Appellant's Argument:
- The appellant argued that even if the service is not zero rated, it should be treated as inter-state supply and attract IGST, not CGST and SGST.

Authority's Findings:
- The lower Authority determined that since both the supplier and the place of supply are in Goa, India, the supply is intra-state, attracting CGST and SGST.

Appellate Authority's Decision:
- The Appellate Authority upheld the lower Authority's ruling, confirming that the supply is intra-state and the appellant is liable to pay CGST and SGST.

Conclusion:
The Appellate Authority maintained the ruling of the lower Authority, rejecting the appeal. The technical testing services do not qualify as 'zero rated supply' since the place of supply is in Goa, India, and the appellant is liable to pay CGST and SGST on the services provided.

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