Import of service- IP Rights

[Ramakrishna Malapaka]

Learned experts,

May kindly share your views on the below context…
Context: IP Rights are allotted to an Indian entity by a foreign entity for promoting/ conducting a sporting event in India. Payment to the same has been released by a foreign entity (who is a RP of Indian entity) to the foreign service provider from outside India. Event would take place in India after making arrangements by Indian entity and giving access to the foreign entity for performing the event. Foreign entity does not have fixed / permanent establishment in india. withholding tax at applicable rates shall be done by Indian entity.

Q: 1. Please let’s know…once the event is performed, Whetter GST is applicable or not?

Q: 2. If applicable, Forward charge or RCM? Based on below payment method, I.e., Payment against the event is made partially from Indian entity and balance from RP entity outside India.

Regards

[Pradeep Reddy Unnathi Partners]

can you slightly elaborate the query please

[KASTURI SETHI]

In my view, tax is applicable under RCM in this scenario.

[Shilpi Jain]

Event is in India. Place of supply thereby in INdia. Liable as import of service.

[Ramakrishna Malapaka]

In light of SC decision in 2017 in the case of Formulae 1 car race matter though they did not have the Fixed Establishment in India .. even for a day of conducting any event by the nonresident service provider on Indian land treated as establishment of PE and made liable for taxability in IT laws… if the same analogy is applied for indirect tax in current situation, consideration received by the service provider for rendering a sporting event in taxable territory..does gst liability not fall under forward charge in the hands of foreign service provider ..? May plz comment ..

AI Summary

Import of service: GST may arise for foreign suppliers of event rights in India, with reverse charge likely but PE analogy contested. The central operative point is that a foreign supplier granting IP and providing event services performed in India results in the place of supply being India and the transaction being an import of service, attracting GST exposure under the reverse charge mechanism payable by the Indian recipient; a contested question remains whether an income tax PE analogy would instead require forward charge liability on the foreign supplier.