Foreign consultant must register for GST when maintaining permanent resources at client sites in India

The AAR Odisha ruled that the applicant must register under Odisha GST Act 2017 and Central GST Act 2017 for consultancy services provided to a power transmission corporation. The authority determined that the applicant's expert/engineer maintaining permanent human and technical resources at client sites constitutes a fixed establishment in India under IGST Act section 2(7). Therefore, the services are supplied from India rather than being imported services under reverse charge mechanism. The place of supply is determined under IGST Act section 12(2)(a), making the applicant liable for GST payment and mandatory registration.

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Issues:
Whether the applicant is required to be registered under Odisha Goods and Services Act, 2017 and Central Goods and Services Act, 2017 for consultancy services provided to a specific entityRs.

Analysis:

Issue 1: Registration Requirement
The applicant sought an advance ruling on whether registration under the Odisha Goods and Services Act, 2017 and Central Goods and Services Act, 2017 is necessary for providing consultancy services to a specific entity. The Authority considered the submissions made by the applicant during the application and personal hearing. The specific question was whether the applicant is required to be registered under the mentioned Acts for the consultancy services provided. The Authority admitted the application for consideration under Section 97(2) of the CGST Act, 2017.

Issue 2: Interpretation of Law
The applicant argued that they are not liable to obtain registration for the consultancy services provided, claiming that the supply is made by a Foreign Company located in Japan and not by the applicant. The applicant referenced various provisions of the CGST Act, 2017, IGST Act, 2017, and relevant notifications to support their contention. They emphasized that the services provided fall under the ambit of a specific notification, making the recipient liable for tax under Reverse Charge Mechanism (RCM).

Issue 3: Location of Supplier
The Authority analyzed the definition of the 'location of the supplier of services' as per the IGST Act, 2017. It was noted that the applicant's expert belonging provided services at the project site in India, indicating a fixed establishment as defined by the Act. The Authority disagreed with the applicant's claim that the services were covered under a specific notification and held that the applicant, as the supplier located in India, is liable to pay GST and therefore required to register under the mentioned Acts.

Conclusion:
The ruling stated that the supply of services to the specific entity did not qualify as an import of service under the IGST Act. The applicant, being the supplier of service in India, was deemed liable to pay tax and thus required to obtain registration under the Odisha Goods and Services Act, 2017 and Central Goods and Services Act, 2017 for the consultancy services provided. The ruling was declared valid unless declared void under the relevant provisions of the GST Act. The applicant was given the option to appeal the ruling to the Odisha State Appellate Authority for advance ruling within 30 days if aggrieved.

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