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RTP GST Series May 2024 (Part-6 : Import & Export of Service : Place of Supply)

We have started a RTP series on GST in MCQ form where we will post MCQs along with detailed Explanations along with additional questions surrounding the concepts asked in RTP for GST CA Final issued for May 2024.


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Import & Export of Service : Place of Supply


Facts

Dhairya Limited sent a team of 25 employees to San Francisco for receiving the training in emerging information technologies.  The training was given by Dhairya Inc., USA, at its office located in San Francisco. The expenses related to such training were paid by Dhairya Limited to Dhairya Inc., USA.


Further, Dhoom Events Ltd., an event management company, located and registered at Karnataka, had organized a cultural event in the month of May for Dhairya Limited, in Dubai. Dhariya Limited paid a sum of Rs. 10,00,000 to Dhoom Events Ltd. for the same.


Qns: Whether Training Provided by the Dhariya Inc, USA will be considered as Import of Service & RCM needs to be discharged.


Answer: No


Additional Qns: If the Training Provided by the Dhariya Inc, USA is in online mode, will it be considered as Import of Service & RCM needs to be discharged.


Answer: Yes, in that case, RCM needs to be discharged.


Additional Qns: If Dhariya Inc, USA provides some consultancy service, will it be considered as Import of Service & RCM needs to be discharged.


Answer: Yes, in that case, RCM needs to be discharged.


Question: Whether Event Services provided by the Dhoom Ltd. will be considered as Export of Service since event has been occurred in the Dubai.


Answer: No


Additional Qns: What would be the place of Supply in this case (Dubai or India)


Answer: India


Additional Qns: If Supply of Service to UN-Registered Person in India, What would be the place of Supply in this case (Dubai or India)


Answer: India


Additional Qns: If all other conditions of Exports fulfilled like Place of Supply is outside India, currency in foreign exchange etc. is fulfilled. Can it still be considered as Export of Supply if service is provided to the Dhairya Limited (registered in Kerala).


Answer: No


Explanation


Import of Service & Place of Provision of Service:


There is RCM liability on the recipient of service in case of " Import of Service". Further, Import of Service has been as per Section 2(11) of the IGST Act, 2017 as:


"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;


In above question first two conditions are satisfied i.e. Dhariya Inc is based out of USA and Dhariya Limited is based out of India. However, third condition is not satisfied because as per Section 13 of IGST Act, Place of Supply of this is USA not India.


Among others, Place of Supply in case of following service is the location of the Supplier:


Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.


The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.


In terms of above provisions, it appears that Place of Provision of Supply of training service in USA is USA not India.


Further, in case training is provided through online mode, it becomes supply of online information and database access or retrieval services (OIDAR) service. In case of OIDAR service, Place of Provision of Service is Location of Recipient of Service (Registered/Un-Registered) i.e. India. Accordingly, in case of online training, RCM needs to be paid.


For Complete Details about special provisions regarding OIDAR Service including when it is provided to the un-registered person, please read at GST on OIDAR Services


In respect of consultancy services, as a general rule, Place of Provisions of Service is in India i.e. Location of Registered Person.


Export of Service & Place of Provision of Service:


Export of Service is defined in Section 2(6) of the IGST Act as below:


( 6 ) "export of services" means the supply of any service when,-

( i ) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

( iv ) the payment for such service has been received by the supplier of service in convertible foreign exchange 1 [or in Indian

rupees wherever permitted by the Reserve Bank of India ] ; and

( v ) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 ;


Since in above case, recipient of service is located India, this transaction can never be considered as Export of Service even if all other conditions are satisfied.


Further, as far as Place of Supply is concerned in this case as per Section 12 (7), is the place of Registered Person i.e. Kerala.


( 7 ) The place of supply of services provided by way of,-

(a) organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or (b) services ancillary to organisation of any of the events or services referred to in clause ( a ),or assigning of sponsorship to such events,-

( i ) to a registered person, shall be the location of such person;

( ii ) to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient.

.....


Accordingly, in both case, Place of Supply of Service would be India not Dubai.


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In case of any query, please raise in Comment Section.


Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.






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