Applicability of GST

[Kaustubh Karandikar]

(XYZ) is in India providing services to foreign delegates when they visit India. All their arrangement like travelling, stay and meetings schedule are taken care by XYZ. XYZ receives payment in INR from PQR (outside India) for arrangement of these services. Is XYZ liable to pay GST on the amount received from PQR?

[Amit Agrawal]

One of condition - for treating supply of any services as 'export' - is that payment should be received by the supplier in India in convertible foreign exchange (or in Indian rupees wherever permitted by the Reserve Bank of India).

So, unless RBI permitted consideration to be received in Indian rupees in subject transactions, they do not fall under 'Export of Services' and thereby, not eligible for benefits as 'zero-rated supply' u/s 16 of the IGST Act, 2017.

Hence, GST is payable on subject transaction/s.

P.S. Arguments against levy of GST - on the basis of challenging constitutional validity - on any of these transactions, are ignored for above views.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Rajagopalan Ranganathan]

Sir,

In my view, since the services are provided within India, the taxable territory, XYZ is liable to pay gst on the amount received from PQR whether in convertible foreign exchange or not.

[Sadanand Bulbule]

Dear Sir

In terms of Section 2(6) of the IGST Act, the opinion of Sri. Ranganathan Sir is crystal clear. I fully agree with it.

[KASTURI SETHI]

Not export of service. I agree with both experts.

[Kaustubh Karandikar]

With due respect to all the experts, i beg to differ from their opinions and my views are given below:

As per Section 2(6) of IGST Act, the place of supply should be outside India. For the purpose of place of supply, you need to refer Section 13 of IGST Act which is relevant for this transaction i.e. Place of supply of services where location of supplier or location of recipient is outside India. This transaction will fall under Section 13(2) as per which the place of supply shall be location of the recipient of service. Since recipient of service viz. PQR is outside India, it will be treated as export of services. Views of the experts please.

[Amit Agrawal]

Dear Shri Kaustubh Karandikar Ji,

Said Section 2 (6) has five conditions - which is cumulative in nature - to fulfill in order to treat 'supply of any service' as Éxport'.

And even if one of these 5 conditions remain unfulfilled, such service of service cannot be treated as 'Export of Services' in my view.

Based on my understanding of factual position from query, Í have given a view above is that subject supply cannot be Export of Services as it does not fulfill condition No. (iv). Your earlier post is silent on this aspect. Kindly elaborate on this.

W.r.t. place of supply argument, first, same is one of five conditions prescribed u/s 2 (6). Second, sub-section (2) of Section 13 is a 'residual provision' to determine place of supply and same is applicable only when 'the services specified in sub-sections (3) to (13)' are NOT matter of consideration. Third, from limited facts shared in the query, it is not possible (at-least, to my mind) to conclusively say 'which sub-section of Section 13' will be applicable for which part / entire services so provided.

Hence, I had limited my earlier reply on the basis of 'non-fulfillment of condition No. (iv) of Section 2 (6) of the IGST Act, 2017'.

I hope this helps you understand reasoning behind my views (shared earlier) better.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. And I respect contrary views.

[Kaustubh Karandikar]

Respected Amit ji,

Thanks for your detailed explanation. In my view, since the payment is received in foreign currency, condition No. iv is getting satisfied. Secondly, going by the nature of transaction it fits in to section 13(2) and therefore can be treated as export of service. Your kind advice please.

[Amit Agrawal]

Sir,

In your query, it was specifically said that 'XYZ receives payment in INR from PQR (outside India) for arrangement of these services'. So, I thought your query is in context of non-fulfillment of condition No. (iv) of Section 2 (6) of the IGST Act, 2017.

Probably, I misunderstood the factual position.

[Kaustubh Karandikar]

Respected Amit ji,

Yes, It was my mistake, i had put in my query that amount is received in INR and accordingly GST is payable. But actually it is received in foreign currency. Thanks for correcting me of my query and many thanks for your quick advice on this issue.

[Amit Agrawal]

Thanks for the clarification, Shri Kaustubh Karandikar Ji!

[KASTURI SETHI]

Sh.Amit Agrawal Ji,

Sir, You have laboured hard to justify your reply. I think now Sh.Kaustubh Karadikar, Sir is satisfied with your replies.

AI Summary

Export of services: zero-rating depends on place of supply and receipt in convertible foreign exchange. Export of services classification requires satisfaction of five cumulative IGST conditions, notably that the place of supply is outside India and consideration is received in convertible foreign exchange (or rupees where RBI permits). If any condition is not met the supply is not an export and is subject to GST in the taxable territory. The contributors debated whether place-of-supply rules alone determine export status; the factual clarification that payment was received in foreign currency addresses the currency condition but does not relieve the analysis of other export prerequisites.