Import of Service

[Kaustubh Karandikar]

1. XYZ exported the goods which needs some rework / repairs at the customer’s premises outside India. The subsidiary Companies outside India had done the required rework / repairs on behalf of XYZ and recovered the amount in foreign currency from XYZ. Is XYZ required to pay GST under reverse charge? In my view, it will fall under Section 13(3)(a) of IGST Act i.e. in case of 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, the place of supply shall be the location where the services are actually performed and therefore no GST since the services are performed outside India. Views of the experts please.

2. XYZ exported the goods which needs some rework / repairs at the customer’s premises outside India. The customer had done the necessary rework / repairs and recovered the amount in foreign currency from XYZ. Is XYZ required to pay GST under reverse charge? In my view, it will fall under the default section i.e. Section 13(2) of IGST Act i.e. the place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services and since the recipient i.e. XYZ is in India, XYZ is liable to pay GST under reverse charge. Views of the experts please.

AI Summary

Place of supply rules under IGST Act: repairs performed abroad treated as outside supply, no reverse charge GST liability.
When repair or rework of exported goods is performed outside India and the goods are physically available abroad to the foreign supplier (or its agent), place of supply is the location of performance outside India; such services are not import of services and do not attract GST under reverse charge. The determining factor is the integrally connected nature of the services to exported goods; however, re-importation of repaired goods or specific reimbursement arrangements may have different tax consequences per regulatory clarifications.