GST on exhibition expenses

[Kaustubh Karandikar]

XYZ, the subsidiary outside India had made some expenses towards exhibition held outside India and amount of the same was recovered from PQR which is the principal in India. Whether PQR is required to pay GST under reverse charge?

[Amit Agrawal]

As per Section 13 (5) of the IGST Act, 2017, The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.

Once the place of supply of services is outside India, there cannot be import of services u/s 2 (11) of the IGST Act, 2017.

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

[KASTURI SETHI]

Dear Sir,

No import of service, especially, keeping in view of place of supply outside India. To qualify for import of service all the three conditions laid down in Section 2(11) of IGST Act should be fulfilled. Condition No.(iii) is not fulfilled. Hence no import of service. No RCM is applicable.

Also read detailed replies against Issue ID 118666.

[Ganeshan Kalyani]

Same applicability was there in service tax as well.

[Ganeshan Kalyani]

I agree with the view of experts.

[Padmanathan KV]

I agree with experts on PoS.

Kaustubh Ji, can you elaborate the facts a little more? Whether expenses were incurred on behalf of PQR or for XYZ itself? if it is only a mere reimbursement of expense, then whether it would be a supply itself has to be examined.

[Ganeshan Kalyani]

Subject to fulfillment of the conditions of pure agent the applicability of GST can be checked. The first transaction - no doubt, the subsidiary situated abroad has incurred the expense. This transaction is not connected to PQR situated in India. So no GST. The only thing is that the subsidiary is recovering that cost from PQR. This can be analysed based on pure agent conditions or a related party transaction where there is deemed supply of service and GST is applicable under RCM.

AI Summary

No GST Reverse Charge on Exhibition Expenses Abroad for Indian Company Under IGST Act, 2017; Further Analysis Needed A query was raised regarding whether the principal company in India, PQR, must pay GST under reverse charge for exhibition expenses incurred by its subsidiary, XYZ, outside India. Responses indicated that since the place of supply is outside India, it does not qualify as an import of services under the IGST Act, 2017, and thus, no reverse charge mechanism (RCM) applies. Experts agreed that the transaction does not fulfill the conditions for import of service, and further analysis is needed to determine if it constitutes a supply or a reimbursement under pure agent conditions.