E-goods transactions with foreign suppliers attract IGST under reverse charge mechanism regardless of cloud storage location

The AAAR Maharashtra ruled on GST liability for e-goods transactions involving cloud servers and foreign suppliers. The authority condoned a 20-day delay in filing the appeal. It held that purchasing e-goods from foreign suppliers constitutes import of services under OIDAR provisions, attracting IGST under reverse charge mechanism regardless of cloud storage location outside India. For supplies to Indian customers paying in rupees, GST is leviable as the place of supply is India based on recipient location. The classification as services under SAC 998439 was upheld. However, the authority declined to determine export treatment for foreign customer transactions, stating case-by-case factual evaluation of seven prescribed conditions under Section 13(12) IGST Act is required.

---

---

Issues Involved:
1. Classification of e-goods as goods or services under GST.
2. GST applicability and rate on supply of e-goods.
3. Exemption status of e-goods under GST.
4. Applicability of IGST under Reverse Charge Mechanism (RCM) for procurement from foreign suppliers.
5. GST applicability on transactions where the customer is from India but pays in foreign currency.
6. GST applicability on transactions where the customer pays in Indian rupees and goods are delivered through a cloud server located outside India.
7. Export status of e-goods/services and related GST implications.
8. Rate of IGST on procurement of e-goods from foreign suppliers.

Detailed Analysis:

1. Classification of e-goods as goods or services under GST:
The Appellate Authority upheld the MAAR's ruling that the supply of e-goods by the Appellant is considered a supply of services under the CGST Act, 2017, in terms of the definition of Online Information and Database Access or Retrieval (OIDAR) Services provided under Section 2(17) of the IGST Act, 2017. The classification of these services falls under SAC 998439.

2. GST applicability and rate on supply of e-goods:
The MAAR determined that the supply of the said services would attract 18% GST. This was upheld by the Appellate Authority, agreeing that the services are not exempt from GST and fall under SAC 998439, "Other online contents not elsewhere specified."

3. Exemption status of e-goods under GST:
The MAAR held that e-goods are not exempt from GST, which was confirmed by the Appellate Authority.

4. Applicability of IGST under Reverse Charge Mechanism (RCM) for procurement from foreign suppliers:
The MAAR ruled that the procurement of e-goods from foreign vendors would attract IGST under RCM as the place of supply for OIDAR services is the location of the recipient (the Appellant), who is in India. The Appellate Authority agreed, stating that the transaction qualifies as an import of services, thus attracting IGST under RCM.

5. GST applicability on transactions where the customer is from India but pays in foreign currency:
The MAAR concluded that if the customer is from India and pays in dollars, the transaction would attract GST as the place of supply is in the taxable territory (India). The Appellate Authority upheld this ruling, emphasizing that the location of the recipient is the determining factor.

6. GST applicability on transactions where the customer pays in Indian rupees and goods are delivered through a cloud server located outside India:
The MAAR held that such transactions would attract GST as both the supplier and recipient are located in India. The Appellate Authority agreed, rejecting the Appellant's contention that it should be considered an out-and-out transaction.

7. Export status of e-goods/services and related GST implications:
The MAAR was unable to ascertain the place of supply for transactions with foreign customers due to insufficient details provided by the Appellant. The Appellate Authority concurred, stating that without meeting the conditions under Section 13 (12) of the IGST Act, 2017, it is not possible to determine the place of supply and thus the export status. This issue was left to be decided by the jurisdictional officer based on transaction-specific facts.

8. Rate of IGST on procurement of e-goods from foreign suppliers:
The MAAR ruled that the procurement of e-goods from foreign suppliers would attract IGST at a rate of 18%. The Appellate Authority upheld this decision.

Order:
The Appellate Authority dismissed the appeal, upholding the Advance Ruling No. GST-ARA-06/2019-20/B-58 dated 15.12.2020 pronounced by the MAAR, confirming the applicability of GST and IGST on the transactions as detailed above.

---