Place of supply: Outside India

[Sunish Ahuja]

Good evening, I have a question and would need your expertise on it to assist my doubts.

Now the scenario is:

A: Indian Freight Forwarder

B: Freight Forwarder Outside India

C: Indian Exporter

D: Buyer based outside India

C (Indian exporter) used A (Indian forwarder's) services to deliver this goods to D (buyer) who is based outside India.

A being an Indian entity, used B (Forwarder outside India) services like Customs clearance outside India, on carriage (door delivery) etc outside India, and charged A for its services.

Place of supply of such services is outside India, however B charged A for its services, and A charged C in Indian rupees + GST.

Now, the question is: is A liable to pay for GST under reverse charge under GST rules?

Regards

Sunish

[SOWMYA CA]

GST under RCM is not attracted as it is not an import of services. The definition of Import of Service U/s. 2(11) clearly provides that supplier is outside India, the recipient is in India and the place of supply of service is in India. However the place of supply is outside india therefore no GST under RCM is attracted.

[Sunish Ahuja]

Thank you Sowmya ji for your guidance. Understood your point but will need some inputs on Notification no. 10/2017 (1) which states:

Category of Supply of Services:

Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient

Supplier of service: Any person located in a non-taxable territory

Recipient of Service: Any person located in the taxable territory other than non-taxable online recipient

So now under this notification, can an individual/company liable to GST on import purchases under reverse charge?

Thank you once again for your help and your help is much appreciated :)

[SOWMYA CA]

Sunish,

Agreed that IGST notification on RCM 10/2017 which provides that when service is provided by a person in the non-taxable territory to any person located in the taxable territory other than a non-taxable online recipient, the liability to pay tax is on the recipient. However this notification only talks about who is liable to pay tax.. however in the present case, there is no levy as there is no import of services into India!!

[Nikhil Virkar]

Dear Swomya madam, Under which sub-section of Sec 13 of IGST you have classified the services of B to determine POS as outside India. My view is that it will fall under Sec13(2) of IGST Act and would liable to RCM.

AI Summary

Reverse charge on imported services may not apply if the place of supply is outside India, despite recipient liability notices. Whether reverse charge applies when an Indian freight forwarder procures services from a foreign forwarder and the place of supply is outside India. Advisers concluded RCM does not apply because the import of services concept requires the place of supply to be in India; the IGST notification on recipient liability allocates tax burden but does not create a levy where place of supply is outside India. A contrary view invoking place of supply rules to attract RCM was recorded.