No export under GST if place of supply is within India

By Editor2 Goods and Services Tax Judiciary December 29, 2021 1 comment

TaxGuru Citation: 2021 taxguru.in 3306
Case Name: In re International Inspection Services Private Limited (GST AAR Telangana)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: AAR/AAAR Telangana, Advance Rulings

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In re International Inspection Services Private Limited (GST AAR Telangana)

International Inspection Services Private limited supply inspection and expediting services during the manufacturing of equipment and packing of equipment/material in India and also abroad. They perform the inspection services for their foreign clients in respect of the equipment/machinery/material in India but which is intended to be exported. They receive inspection charges from their clients in foreign currency. As the goods are ultimately exported to outside the country, they request clarification regarding liability of their supplies to tax. Hence this application.

The recipient of services provided by the applicant is a foreign buyer of Indian goods. The applicant performs services in relation to goods located or under manufacture in the territory of India on behalf of the foreign buyer. The liability to tax in this situation is governed by the place of supply rules as enumerated under Section 13 of the IGST Act, 2017. This Section deals with place of supply of services where location of supplier or location of recipient is outside India. Sub section 3 of Section 13 reads as follows:

“3. The place of supply of the following services shall be the location where the services are actually performed, namely:

(a) Services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services.”

In the instant case, the location of the recipient is outside India however the location where the services are actually performed in respect of goods is in the Country. Therefore the place of supply of services provided by the applicant are within the Country and hence liable to SGST & CGST in the State of Telangana.

Q1. Whether services rendered for foreign companies (which do not have any business place/agency in India) in India is considered as an export or not?

Place of supply of services provided by the applicant are within the Country and hence liable to SGST & CGST and will not be treated as export.