The Hon’ble AAR Odisha, in the matter of Tokyo Electric Power Co. [Order No.02/Odisha-AARJ2020-21 dated November 19, 2020] held that supply of consultancy service to an Indian entity Odisha Power Transmission Corporation Limited (OPTCL) is not import of service in terms of Section 2(11) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) as the location of supplier as per Section 2(15) of the IGST Act is in India. Therefore, the Tokyo Electric Power Company, Holding Inc., being the supplier of service in India, is liable to pay tax and required to take GST registration.
M/s Tokyo Electric Power Company Service Limited (“TEPSCO”), a Japan based company, in association with Tokyo Electric Power Company, Holding Inc., (“Applicant”), a Japan based Company (collectively referred as “Consultants”) has entered into an agreement dated, April 13, 2018, with OPTCL, whereby consultants have agreed to provide consultancy services to M/s Odisha Transmission System Improvement Project (“Project”), Odisha, India.
The Applicant will provide and transfer the technical knowledge in relation to the outdoor Geographic Information System (“GIS”) equipment to OPTCL’s engineers and staff through the actual consulting activities during the design stage and implementation stage of the project. The Applicant would carry out/provide consultancy services by the expert belonging/sub-station Engineer.
The Applicant was of view that he is neither liable to obtain registration as a regular taxpayer nor as a non-resident taxable person for the consultancy services provided to OPTCL. The Applicant also tried to establish that the supply is made-by the Foreign Company, who is located in Japan is not the supplier in the context of rendering consultancy service and would be liable to pay the tax under Reverse Charge Mechanism (“RCM”).
Whether the Applicant is required to be registered under Odisha Goods and Services Act, 2017 (“OGST Act”) and Central Goods and Services Act, 2017 (“CGST Act”) for the consultancy services provided to Odisha Power Transmission Corporation Limited?
The Hon’ble AAR Odisha, in Order No.02/Odisha-AARJ2020-21 dated November 19, 2020 held as under:
Section 2(7) of the IGST Act:
“(7) “fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs;”
Section 2(11) of the IGST Act:
“(11) ‘‘import of services” means the supply of any service, where––
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India;
Section 2(15) of the IGST Act:
“(15) “location of the supplier of services” means,––
(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;”
Section 12(2) of the IGST Act:
“Place of supply of services where location of supplier and recipient is in India-
(2) The place of supply of services, except the services specified in sub-sections (3) to (14),––
(a) made to a registered person shall be the location of such person;
(b) made to any person other than a registered person shall be,––
(i) the location of the recipient where the address on record exists; and
(ii) the location of the supplier of services in other cases.”
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