Maintenance and Repair Contract not an import of service; Tax liability on domestic MARC Holder upheld

The ruling determined that the service supply under the Maintenance and Repair Contract (MARC) did not qualify as an import of service, thus shifting the tax liability to the domestic MARC Holder, i.e., the applicant. Consequently, the recipient was not held liable to pay GST on a reverse charge basis. The ruling stands unless invalidated under provisions of the GST Act.

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Issues:
1. Admissibility of the Application
2. Submissions of the Applicant
3. Submission of the Revenue
4. Observations and findings of the Bench

Admissibility of the Application:
The applicant, a branch of a Foreign Company, entered into a Maintenance and Repair Contract (MARC) with a local entity. The question raised regarding liability to pay GST under reverse charge basis is deemed admissible under section 97(2) (b) & (e) of the GST Act. The concerned officer did not object to the admissibility, leading to the application being admitted.

Submissions of the Applicant:
The applicant argues that the MARC constitutes import of service under the IGST Act, making the recipient liable to pay tax on reverse charge basis. The applicant, being a branch of the Foreign Company, asserts that the tax responsibility falls on the recipient as per Notification No. 10/2017 - Integrated Tax (Rate) dated 28/06/2017.

Submission of the Revenue:
The revenue officer highlights the applicant's tax status and ITC accumulation, indicating no liability in GSTR 3B and GSTR 1 but significant ITC in GSTR 2A. Additionally, an import of goods was reported in a return, raising further considerations.

Observations and Findings of the Bench:
The Bench notes that the applicant is not the direct supplier in the MARC but acts on behalf of the Foreign Company. Despite this, the application is accepted, and a ruling is to be pronounced due to the conviction that the applicant is indeed the service supplier. Detailed analysis of the MARC terms reveals the supplier's location in India, making them liable to pay GST as per the MARC clause.

Conclusion:
The ruling states that the service supply under the MARC does not qualify as an import of service, shifting the tax liability to the domestic MARC Holder, i.e., the applicant. The recipient is not liable to pay GST on reverse charge basis. The ruling remains valid unless declared void under the GST Act provisions.

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