Import of Service

[Kaustubh Karandikar]

XYZ(India) exported goods to PQR(Malaysia). Subsequently, the goods required certain repairs for which XYZ appointed ABC(Singapore) to carry out the repairs. ABC carried out the repairs at Malaysia and charged the repairing charges to XYZ. Is XYZ liable to pay GST under reverse charge on amount paid to ABC?

[KASTURI SETHI]

ABC has provided service to PQR (Malaysia) for and on behalf of XYZ (India) XYZ is, de facto, service receiver. IGST is to be paid under reverse charge mechanism. Covered at serial no.1 of Notification No.10/17-IT (Rate) dated 28.6.17.

[Kaustubh Karandikar]

Respected Kasturi ji

Appreciate your guidance. However, in my view, it will fall under Section 13(3)(a) of IGST Act i.e. services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services, under which the place of supply shall be the location where the services are actually performed. Since the services are performed outside India, no GST under reverse charge. Views of experts please.

[KASTURI SETHI]

My view is based on the decision of AAR. Anyhow, let us wait for decision of other experts.

[Ganeshan Kalyani]

XYZ (India) is receiving service from ABC (Singapore) so it is an import of service. GST is payable under reverse charge mechanism.

[KASTURI SETHI]

Dear Sir,

Why to invite SCN ? Pay tax and take ITC.

[Alkesh Jani]

Sir,

The Section 13 (1) of IGST states that “(1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India”.

Therefore, Section 13(3)(a) of IGST Act is applicable to determine the place of supply of service.

Further, I beg to differ and of the view that it is not covered by Notification No.10/17-IT (Rates) and as place of supply of service is outside taxable territory.

Thanks

With due regards

AI Summary

Import of service: reverse charge may apply to foreign repair services for an Indian recipient unless place-of-supply locates them outside India.
Treatment depends on whether the foreign repair service is treated as an import of service, attracting GST under the reverse charge mechanism, or whether the place-of-supply rules locate the service outside India because the repairs were performed abroad, in which case no GST under reverse charge would apply.