Import of service by a supplier of exempt service

[Lalitha Krishnamurthy]

The services provided by a client of ours are wholly exempt and he is not registered under the CGST Act by virtue of section 23. He now proposes to import certain services from abroad for his business purposes. Is he required to pay IGST under reverse charge and if so, liable to get himself registered? Section 24, which provides for compulsory registration refers only to section 22 and not 23.

Would there be any difference if the service being imported is OIADB access or retrieval service?

Thank you for your guidance.

AI Summary

Reverse charge liability: recipients importing taxable services generally must register and pay GST under reverse charge unless notified otherwise.
Where a recipient whose own supplies are wholly exempt imports taxable services, the reverse charge mechanism generally makes the recipient liable to pay IGST and section 24 triggers compulsory registration to discharge that liability; the 2023 amendment to section 23(2) permits notifications exempting specified categories from registration notwithstanding other provisions, but absent such a notification the recipient will likely need to register and pay tax under RCM. For certain OIDAR services the statutory scheme may instead place liability on the non taxable unregistered foreign supplier to register and remit tax.