Import of Services and treatment under GST Law

Article discusses about The Import of services and treatment under GST. Effective from 01.07.2017 many services are included under Tax Net in India. The Goods and Services Tax Act, 2017 is introduced all over India (Except Jammu and Kashmir up to 7.7.2017). In Jammu and Kashmir GST Act is been applicable from 8.7.2017.

Let us understand what is a service? What is import of services? how it is taxable in the GST Scenario?  Now we have to study the definitions of Important terms to apply GST Law on import of services as per GST Law, 2017 for better understanding.

What is the definition of services as per GST Law, 2017?

As per Section 2 sub-section 102 of CGST Act, 2017” Services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form of currency or denomination to another form, currency or denomination for which a separate consideration is charged”.

What is the definition of “Import of Services” under GST Law?

Section 2 sub-section 11 of CGST Act,2017 “ Import of services means , the supply of any services , where –

(i) The supplier of service is located outside of India,

(ii) The recipient of services is located in India, and

(iii) The place of supply of service is in India.

What is the definition of Place of supply of services under GST Law,2017?

Under GST Scenario determination of place of supply of services is more complicated as compared to determination of place of supply of goods as there is no physical supply as in the case of goods. The deeming concept of place of supply is more prevalent in case of services. The place of supply of services in case of GST law is to certain extent similar to the existing provisions of Provision of Services Rules,2012.

What is the meaning of Location of the recipient of services under GST Law?

As per section 2(14) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), Location of the recipient of services means as below:

(a) Where a supply is received at a place of business for which registration has been obtained , the location of such place of business,

(b) Where a supply is received at a place other than the place of business for which registration has been obtained the fixed establishment.

(c) Where a supply is received at more than one establishment , whether the place of business or fixed establishment , the location of the establishment most directly concerned with the receipt of the supply, and

(d) In absence of such places, the location of the usual place of residence of the recipient.

What is the meaning of Location of supplier of services under GST Law,2017?

As per Section 2(15) of IGST Act, 2017, Location of the supplier of services means as below:

(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.

What is the meaning of fixed establishment under GST law,2017?

As per Section 2(7) of IGST Act, 2017, and Section 2(50) of the CGST Act, 2017 “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.

What is the meaning of place of business under GST Law,2017 ?

As per section 2(85) of CGST Act,2017,” Place of business means:

(a) A place from where the business is ordinarily carried on and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both, or

(b) A place where a taxable person maintains his books of accounts, or

(c) A place where a taxable person is engaged in business through an agent by whatever name called.

What is the meaning of Usual place of residence under GST Law,2017?

As per Section 2(113) of CGST Act, 2017, Usual place of business means :

(a) In case of an individual, the place where he ordinarily resides,

(b) In other cases, the place where the person is incorporated or otherwise legally constituted.

What is the meaning of Intermediary services under GST Law,2017?

As per Section 2(13) of IGST Act,2017, “Intermediary services” means a broker, an agent or any other person by whatever name called , who arranges or facilitates the supply of goods or services or both or securities between two or more persons but does not include a person who supplies such goods or services or both or securities on his own account.

Under what circumstance Reverse Charge is applicable on import of services under GST Law,2017?

As per Notification No. 12/2017-CT(Rates) and Notification No. 10/2017-IT(Rates) dated. 28.6.2017, If the supplier of services is located in a non-taxable territory, the recipient of services located in the taxable territory is liable to pay Reverse Charge basis.

As per Notification No. 6/2018-IT (Rate) dated. 25.1.2018 IGST is not payable on import of services under RCM ,if value of royalty and license fee was included in customs value of goods imported.

What is the time of supply, if RCM is applicable on import of services  under GST Scenario?

If supply covers under Reverse Charge Mechanism , the time of supply shall be earlier of the following:-

(I) Payment date or

(II) Day after 60 days of issuance of invoice. i.e. 61 days.

 Is any Specific exemption to import of services from tax payment under GST scenario?

(1) As per Notification No. 9/2017-IT (Rate) dated 28.6.2017 w.e.f.27.7.2018, Import of services by United Nations or a specified International organisation for official use of the specified international organisation is exempted form GST Tax liability under IGST Law,2017.

(2) As per Notification No. 9/2017–IT (Rate) dated 28.6.2017 inserted w.e.f. 27.7.2018 ,Import of services by Foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein is exempted from IGST tax liability under IGST Law, 2017.

What  can be considered as import of services under GST Scenario ?

As per Sec.2(11) of IGST, 2017, Supply of any service where the supplier is located outside India, the recipient is located in India and the place of supply of services is in India it can be considered as Import of Service.

Supply with Consideration : As per section 7(1) (b) of IGST Act, 2017, import of services for a consideration whether or not in the course or furtherance of business shall be considered as a supply. Normally, import of services without consideration shall not be considered as supply.

Supply without consideration: As per Schedule-I of the CGST Act, 2017, the import of services by a taxable person from a related person or from a distinct person as per section 25 of CGST Act, 2017, in the course or furtherance of business shall be treated as supply even if it is made without any consideration.

Hence, the import of services can be considered as supply based on whether there is consideration or not and whether the service is supplied in the course or furtherance of business.

When to issue an  invoice in the  case of import of services under GST law?

As per section 13(3)(f) of CGST Act read with sec.20 of IGST Act, 2017 , in the case of import of services , self-invoice can be issued on the date of receipt by such suppliers and  is required under GST Scenario.

At the outset, all the import of services into India will be treated and regarded as Inter-State supplies and would be liable to IGST Tax under GST law.