Taxability of referral services procured by Indian company from US entity under IGST Act

The case involved determining the taxability of referral services procured by an Indian company from a US entity under the IGST Act. The applicant argued that the services did not qualify as an import of service and were not taxable in India. The ruling authority did not provide a ruling on the matter of tax liability as it was beyond their jurisdiction. The application was disposed of without a determination on the place of supply.

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Issues Involved:
1. Taxability of services procured by the applicant from Beacon US under the IGST Act, 2017.
2. Qualification of the said service as an import of service under Section 2(11) of the IGST Act, 2017.
3. Liability to pay tax for the services rendered by Beacon US to the applicant.

Detailed Analysis:

Issue 1: Taxability of Services Procured by the Applicant from Beacon US
The applicant, a company engaged in providing human resource consulting services, sought an advance ruling on whether the referral services procured from Beacon US are liable to tax under the IGST Act, 2017. The applicant contended that the referral services provided by Beacon US, which involved identifying and referring a client (FIS India) to the applicant, should be classified as 'intermediary services' under Section 2(13) of the IGST Act. The applicant argued that since Beacon US facilitated the supply of services between the applicant and FIS India, it acted as an intermediary. According to Section 13(8)(b) of the IGST Act, the place of supply for intermediary services is the location of the supplier, which in this case is outside India. Consequently, the applicant claimed that the services do not qualify as an import of service and are not taxable in India.

Issue 2: Qualification as an Import of Service
To determine if the services qualify as an import of service, the criteria under Section 2(11) of the IGST Act must be met:
- The supplier of service is located outside India.
- The recipient of service is located in India.
- The place of supply of service is in India.

The applicant admitted that the supplier (Beacon US) is located outside India and the recipient (the applicant) is located in India. However, the critical point was determining the place of supply. The applicant argued that the place of supply, being the location of the intermediary (Beacon US), is outside India, thus not fulfilling the condition for 'import of services.'

Issue 3: Liability to Pay Tax
The applicant sought clarification on who would be liable to pay tax if the services were deemed taxable. The ruling authority examined the provisions under Section 5 of the IGST Act, which levies IGST on all inter-state supplies of goods or services. Since the applicant admitted that the services are imported into India and treated as inter-state supply under Section 7(4) of the IGST Act, the determination of the place of supply became crucial. However, the authority refrained from ruling on this matter as it was beyond their jurisdiction under Section 97(2) of the CGST Act, 2017.

Ruling:
The application was disposed of without any ruling on the determination of the place of supply, as it was beyond the jurisdiction of the authority.

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