Question on which AAR sought and discussions made

-The applicant sought ruling on requirement of registration under Odisha Goods and Services Act, 2017 & CGST ACT, 2017 for the consultancy services provided to Odisha Power Transmission Corporation Limited 

-Whether GST is payable on RCM basis by OPTCL in relation to import of services from Applicant

Facts of the case 

1. Applicant has entered into an agreement dated 13 April,2018 for providing consultancy services to Indian company Odisha Power Transmission Corporation Limited (OPTCL) for Odisha Transmission System Improvement Project, Odisha.

2. Other terms of agreement include-

  • To provide and  transfer technical knowledge in relation to outdoor GIS Equipment to OPTCL’s engineer and staffs through actual consulting activities during the project’s design and implementation stage 
  • To carry out these consultancy services by the expert belonging/ sub- station engineer 
  • OPTCL has provided an office to the consultant for providing consultancy services 
  • OPTCL would borne office operation and maintenance charges 
  • To have a stay in India according to below schedule-
    Year/Month No. of days
    Oct. 2021 15 days
    Nov. 2021 15 days
    Dec. 2021 15 days
    Jan. 2022 30 days
    Feb. 2022  15 days

Queries answered by Representative CA in Personal Hearing

Query 1 Whether Applicant holds office in India?

Reply: 

  • Applicant doesn’t hold any office in India whether office or rented. 
  • Engineers/Professionals stay in hotels on visit to India. 

Query 2: Whether applicant holds PAN under Income tax laws?

Reply: Company is registered as a Foreign Company with PAN AADCT2593H 

Legal Provisions

GST is leviable on basis of place of supply and location of supplier of services.

Place of supply means the place from which services are supplied. 

According to Section 2(15) of IGST Act, 2017, location of supplier of services means-

1. Where a supply is made from a place of business for which registration has been obtained, the location of such place of business.

2. Where a supply is made from a place other than place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment.

3. Where a supply is made from more than 1 establishment, whether a place of business or fixed establishment, the location of establishment most directly concerned with the provision of supply.

4. In absence of such places, the location of the usual place of residence of the supplier. 

Findings

Following is analyzed from the documents and agreement provided by the applicant –

  • Applicant would provide consultancy services through the expert belonging/ sub- station engineer.  
  • OPTCL has provided an office to the consultant for providing consultancy services.  
  • OPTCL would borne office operation and maintenance charges. 
  • Expert belonging/ sub- station engineer is to be paid at an agreed rate for performance of services. 

Application of Legal Provisions to given case

  • Since Expert belonging/ sub- station engineer is providing services through a fixed establishment, so that will be treated as Location of supplier of services.
  • Though in this case, Recipient of services is in India and Supplier of services is outside India. 
  • But due to location of supplier is fixed establishment, Supply of service to OPTCL not covered under Import of services and so not liable to pay tax under RCM.

Ruling by AAR

  • Since location of supply is fixed establishment, Supply of service to OPTCL not covered under Import of services and so not liable to pay tax under RCM.  
  • So Applicant is required to get registered under Odisha Goods and Services Act, 2017 & CGST ACT, 2017 for the consultancy services provided to Odisha Power Transmission Corporation Limited. 

Source- In re Tokyo Electric Power Company (GST AAR Odisha); Order No. 02/0disha-AAR/2020-21; Dated: 01/10/2020

Author Bio

Qualification: CS
Company: N/A
Location: EAST DELHI, Delhi, India
Member Since: 15 Apr 2020 | Total Posts: 16
I am Qualified Company Secretary June 2019 Batch. Writing legal blogs and articles for websites is my passion. Practising in Incorporation of Companies, Winding up of Company, All kinds of ROC Compliance, Annual Filing, Income Tax Return Filing ,Search Report for Companies. View Full Profile

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