In re Amogh Ramesh Bhatawadekar (GST AAR Maharashtra)
Question. I) Whether ‘e-goods’ as commercially known in the market are ‘goods’ as defined in the GST Acts or are they services as per GST Act?
Answer: – E-goods, in this case- ‘Online Gaming’ will be covered under services under the GST Act.
Question. 2) If they are goods what is the It’s HSN classification and or if services what is SAC classification& rate of GST on its sale/supply within state?
Answer: – In view of observations made above the SAC will be 998439.
Question. 3) Whether they are exempted from GST?
Answer: – Answered in the negative.
Question. 4) If Not exempted, what is the rate of GST on supply?
Answer: – GST rate will be 18%.
Question. 5) In what circumstances IGST under reverse charge will be applicable or whether it is applicable in the situation of procurement from foreign supplier & supply from out of India as discussed above?
Answer: – In the situation of procurement from foreign supplier & supply from out of India the applicant has to discharge IGST liability under reverse charge mechanism.
Question.6)If the customer is from India and paying the consideration in dollar, whether it will be allowed as exports or if not allowed as exports then whether GST is leviable? What is rate of SGST & CGST or IGST? Under which HSN Code or SAC?
Answer: – Since both, the customer and the applicant arc in India, GST would be liable @18% under SAC 998439.
Question.7) If customer pays for the e-goods in Indian rupees and goods delivered through CLOUD located outside India whether SGST & CGST or IGST leviable on such transactions?
Answer: – GST is leviable, in view of the discussions made above.
Question. 8) In case where customer / buyer is from out of India and payment is done in dollar according to us it is export of goods / services and therefore neither SGST & CGST is leviable? Please clarify the same.
Answer: – Not answered in view of discussions made above.
Question.9) In case buyer is from India the goods/ services are stored in CLOUD which are the servers outside India therefore even though payment is received in rupees ,it is again export of services being services are received from distantly installed servers. Hence No CGST and or SGST is leviable?
Answer: – Said services are not export of services and hence GST must be discharged by the applicant.
Question. 10) Whether IGST is applicable under section 5( 3 ) & 5( 4) of the IGST Act, according to us it is not because it is not imported into India and the services are stored on CLOUD and therefore it cannot be said to be imports and thus not liable for RCM?
Answer: – IGST is applicable under section 5( 3 ) & 5( 4) of the IGST Act.
Question. 11) If suppose RCM is applicable then its rate? May please be clarified.
Answer: – Answered in the affirmative. IGST @ 18% will be applicable.
Read AAAR Order: IGST under RCM payable on purchase of e-goods from foreign suppliers
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. AMOGH RAMESH BHATAWADEKAR, the applicant, seeking an advance ruling in respect of the following questions.
1)Whether “e goods”, as commercially known in the market, are “goods” as defined in the GST Acts or are they services as per GST Act?
2) If they are goods, what is the IISN classification and if services, what is the service classification and rate of GST on its sale/supply within state?
3) Whether they are exempted from GST?
4) If Not exempted, what is the rate of GST on supply?
5) In what circumstances will IGST, under reverse charge, be applicable or whether it is applicable in the situation of procurement from foreign supplier and supply from out of India as discussed above?
6) If the customer is from India and paying the consideration in dollar, whether it will be allowed as exports or if not allowed as exports then whether GST is leviable? What is rate of SGST & CGST or IGST? Under which HSN Code or SAC?
7) If customer pays for the e goods in Indian rupees and goods delivered through CLOUD located outside India whether SGST & CGST or IGST leviable on such transactions?
8) In case where customer / buyer is from out of India and payment is done in dollar, according to us it is export of goods / services and therefore neither SGST & CGST is leviable? Please clarify the same.
9) In case buyer is from India, the goods/ services are stored in CLOUD which are the tside India, therefore even though payment is received in rupees, it is again rvices being services are received from distantly installed servers . Hence No r SGST is leviable?
10) Whether IGST is applicable under section 5( 3 ) & 5( 4) of the IGST Act, according to of because it is not imported into India and the services are stored on CLOUD and refore it cannot be said to be imports and thus not liable for RCM ?
11) If suppose RCM is applicable then its rate? May please be clarified.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION — AS PER THE APPLICANT
2.1 I The applicant, Amogh Bhatavdekar, located in Thane is a proprietor supplying digital goods, in the subject case ‘online gaming’ and has not obtained GSTIN because he is of the opinion that the services rendered by him is export of e-goods (Digital Goods).
2.2 Applicant has submitted that, in electronic commerce, digital goods are described as goods, which are stored, delivered and used in electronic format and shipped electronically to the consumer through email or downloaded from the Internet.
2.3 Applicant has reproduced the definition of ‘Digital Goods’ from Wikipedia and submitted that, Digital goods are products and services that are completely delivered using information technology i.e. they don’t involve an exchange of physical things.
2.4 Applicant’s website address is MMOPLAYSTORE.COM. Applicant contacts the suppliers of digital products requesting a list of digital products that are available with them. Digital Goods are then sent to the applicant by Email or Instant message service and payout is issued. These received digital goods are assessed and stored on Cloud Servers for dispatching to customers of the applicant. Customers visit the Website of the applicant online and make payments to the applicant, after which Digital Goods are then delivered by cloud server to customer by Email. Applicant has submitted thair Suppliers are located abroad and include New Gameway from China, payproGlobal and MmoBay LLC from the USA. Suppliers are contacted by Email or instant Message service. The Payments are received from customers using PayPal.
2.5 The purchase of these digital goods are made online by the applicant’s customers. Once, payment is received, the merchant provides the customer with a digital item as an e-mail attachment or may provide a secure link where the item can be downloaded.
2.6 No invoice is raised for delivering digital said goods, which have limited life of say, a few days or weeks. Payments are done by applicant’s customers on line. It is not a software sale and does not require license. There is no work involved at the site of the client.
2.7 Applicant has stated that: a) Digital goods/e-goods are not necessarily goods as commonly understood & as defined in the GST Acts but they can at best be called as “services.” (b) They are supply of services done through internet or mails. There is no delivery of e-goods as such. (c) The said e-goods, are stored on CLOUD which are located outside India, & are purchased from vendors outside India who send it to the CLOUD as identified by the buyer / vendor/ the applicant. (d) The e-goods are not received by the seller in India but are stored on CLOUD hence it cannot be said to be imports in India, hence out of purview of reverse charge mechanism under the IGST Act. (e) The buyers are usually from abroad, who pay in dollars directly through PAYPAL, therefore it is supply outside India taking it outside purview of IGST levy. It is export of services i.e. it is out and out services not liable to either IGST or CGST & SGST It is covered by the clarificatory Circular No.78/52/2018 -GST New Delhi dated 31/12/2018.
2.8 Their services are covered under HSN Chapter Nos. SAC 99841 to 99846 and not liable to GST or IGST, being stored on/ received on CLOUD servers which are usually located abroad and delivery/supply of the e-goods to customers is done from the CLOUD server itself. It is therefore fully outside India and not liable to GST, being export of services.
03. CONTENTION — AS PER THE JURISDICTIONAL OFFICER:
The jurisdictional office has not made submissions.
04. HEARING
Preliminary hearing in the matter was held on 05.11.2019. Sh. D.V. Retharekar, Advocate, appeared on behalf of the applicant and requested for admission of their application. Jurisdictional Officer was absent.
4.2 Application was admitted and called for final hearing on 26.11.2019. Sh. D.V. Retharekar, Advocate and Authorized Representative, appeared along with applicant, made oral and written submissions. Jurisdictional Officer was not present.
4.3 Further online hearing was given to the applicant on 10.11.2020 and 01.12.2020. On both occasions the applicant requested for adjournment.
05. OBSERVATIONS AND FINDINGS:
5.1 We have gone through the facts of the case, documents on record and oral and written submissions made by both, the applicant as well as the jurisdictional officer.
5.2 Applicant is a supplier in digital goods and has submitted that, in electronic commerce, digital goods/e-goods are used to describe any goods that are stored, delivered & used in its electronic format. These goods are shipped electronically through email or are downloaded from the Internet.
5.3 In the subject case the e-goods, referred to by the applicant are ‘online gaming’, as stated by him during the course of Final Hearing. Section 2(17) of the IGST Act, 2017, defines ‘online information and database access or retrieval services’ (OIDAR) as “services whose delivery is mediated by information technology over the interne/ or an electronic network and the nature of which renders their supply essentially automated involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,-
………… (vii) online gaming.”
This definition will answer the first question posed by the applicant i.e. e-goods (in
this case online gaming) will be considered as services under the GST Laws.
5.4 The next three questions are regarding classification of the above said services, and the rate of GST on such, if the same are not exempted.
5.4.1 The Code wise List of services finds mention in Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. In the subject case we find that the applicant is supplying nline content services’. The relevant Sr. Nos 379 to 384 are reproduced as under:-
