Packing services collected from Indian company by the overseas warehouse agent for materials supplied to overseas customers - Whether RCM to be paid

[Balaji Srinivasamurthy]

Dear experts,

The materials are exported from India and kept at a warehouse outside India (intermediary services). The materials are supplied locally from the warehouse to the overseas customer. Whether GST to be paid under RCM or not, if the warehouse agent collects the packing charges from the Indian company in foreign currency? I referred Section 2(11) of IGST Act for the definition of Import of Services and Circular No. 203/15/2023-GST dated 27.10.2023 where the department clarified after the omission of Section 13(9) of IGST Act, however, request detailed insight on this matter.

[Balaji Srinivasamurthy]

Dear experts,

I missed to mention in my previous query. The goods are supplied from the warehouse outside India to the customer outside India (however both are located nearby), can we presume the supply shall not be covered in the scope of supply as per Section 1 of both CGST Act and IGST Act and RCM provision does not apply?

[Sadanand Bulbule]

Where goods are exported from India, stored in a warehouse outside India, and supplied from that warehouse to an overseas customer: 

If the warehouse/packing agent raises invoice on the Indian exporter (i.e., Indian company is the recipient of service), then as per Section 2(11) of IGST Act read with Circular No. 203/15/2023-GST (27.10.2023), the place of supply is India (recipient’s location). This amounts to import of services, and IGST is payable under RCM by the Indian company (ITC can be claimed, subject to eligibility).

If the warehouse/packing service is contracted to / invoiced on the overseas buyer, then the recipient is outside India. Import of services test fails, hence RCM does not apply. The onward supply of goods from the foreign warehouse to an overseas customer is also outside the scope of supply under GST law (as per Section 1 of CGST/IGST Acts, GST applies only within India).  

Key determinant: who is the “recipient” of the warehouse/packing service as per contract & invoice. Currency of payment is irrelevant; documentation decides whether RCM applies.

[Shilpi Jain]

Also refer section 13(3)(a) of the IGST Act in this regard to see if it is import of service.

The goods sold abroad are by the Indian exporter?

Ensure that your FEMA regulations and the aspects of issuance of GST invoice at the time of sale from warehouse are also complied with.

[KASTURI SETHI]

Sh. Sadanand Bulbule,

Sir has covered both situations in a perfect manner. Supplementary query stands covered nicely by Sh. Sadanand Bulbule, Sir in his reply at seral no. 2

[Sadanand Bulbule]

Dear Sirji

Kind of you for endorsing my opinion.

AI Summary

Import of services triggers IGST under RCM when warehouse agent invoices the Indian recipient; invoicing to overseas buyer avoids RCM. RCM applies if the overseas warehouse/packing agent invoices the Indian exporter, because the place of supply is India under import-of-services rules and IGST is payable under reverse charge by the Indian company; if the service is invoiced to the overseas buyer (recipient outside India) the import test fails and RCM does not apply. Currency of payment is irrelevant; contractual documentation and invoicing determine the recipient for place-of-supply and GST treatment.