GST on Reimbursements

[Madhavan iyengar]

A overseas Company (B) based in Russia has asked an Indian Party (Y) based in Gujarat to make arrangement for conduct of exhibition in Tamilnadu

Y based in Guajrat instructs event management company Z in Tamilnadu to arrange for all facilities for exhibition.

Z will raise an IGST invoice on Y for the event management services

Y will take credit of IGST

Now Y will raise invoice on B based in Russia ( back to back invoice or with some margin)

Query : will Y have to charge GST (if the invoice is back to back) then which GST to be charged IGST or CGST/SGST

If Y has to charge GST ( if the invoice is with margin) then which GST to be charged IGST or CGST/SGST

experts kindly clarify

[KASTURI SETHI]

In both ways, CGST + SGST is applicable.

[Madhavan iyengar]

kasturi sir

can you further elabortae why cgst/ sgst is applicable in this case

[KASTURI SETHI]

Y is playing the role of intermediary service. Place of supply is in India and that too the location of supplier of service. It is not export of service.

[Shilpi Jain]

The PoS for the services provided by Y to B would be the place where the event is held as per section 13(5) of the IGST Act. Supplier and PoS in India. Not export and thereby liable to GST.

Though the type of tax to be charged is not very clear as there are contradictory views stating IGST is to be charged as section 8(2) does not refer to section 13 of IGST Act. WHatever tax is paid, intimation can be made to the department.

[KASTURI SETHI]

In the present scenario, no interest or penalty is going to be charged.

[KASTURI SETHI]

Respected Ms.Shilpi Jain,

Yes. There are contradictory judgements on this issue.

I seek your opinion on the following :

When there is no movement of service from one State to another, can we consider that CGST/SGST is applicable ? There are so many factors. This can be major factor for determining place of supply.I am not talking about this case. I am talking generally.

Pl. clarify. Thanks a lot.

[Shilpi Jain]

Dear Sir

The criteria to be looked into is not whether the service is moved outside the State or not. We will have to go strictly by the PoS provisions and then identify whether inter-State or intra-State. This is more so because in many cases it becomes difficult to identify and fix where the service is received or consumed as service is intangible.

Hence to avoid ambiguity PoS provisions are in place as they were under ST law.

AI Summary

Place of supply rules determine domestic GST liability on intermediary exhibition services, requiring CGST and SGST rather than IGST. A domestic intermediary arranging an India based exhibition for a foreign principal is supplying intermediary services with the place of supply at the event location in India; consequently the supply is not an export and should be subject to domestic GST as CGST and SGST rather than IGST.