Supreme Court issues notice on PIL asking for a system to track GST paid by Facebook, Amazon, Google, Twitter, Others

CA Sapna Ghelani | Last updated: 22 March 2021

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The Supreme Court of India has issued a notice to the central government regarding a Public Interest Litigation (PIL) seeking a system to track Goods and Services Tax (GST) paid by foreign online service providers like Facebook, Amazon, and Google. The PIL highlights a lack of mechanism to verify total receipts and GST compliance from these companies providing Online Information Database Access and Retrieval (OIDAR) services in India. The court is considering amendments to GST forms to better reflect revenue from these services.

Court: Supreme Court of India

Brief: Present writ petition was filed before Honourable Supreme Court of India under article 32 of Constitution seeking mechanism from government of India to track GST paid by Facebook, Amazon, Google, Twitter, others providing Online Information Database Access and Retrieval services (hereinafter referred to as OIDAR) in India from foreign jurisdiction.

Citation: Writ Petition(s)(Civil) No(s). 258/2021, diary no. 1313/2021

The three-judge bench of Chief Justice while issuing notice to the centre seeks to amend GSTR-5A or introduce a new form to reflect in the GST return figures of revenue generated out of services to NTOR.

Pradeep Goyal (the petitioner) sought directions to the Centre to have a mechanism to verify the total receipts earned by foreign online service providers from India and check GST compliance. Adding further, the petitioner also stated that the Government has no mechanism to track total GST paid on OIDAR services used by NON NTORs Indian recipients under reverse charge basis.

Supreme Court Seeks GST Tracking System for Online Giants

The petitioner has explained that the services of OIDAR are provided using internet and the services are received online without any physical interface between recipient and supplier. While a detailed invoice level data is collected from individual consumer, it is not collected from registered entities. Therefore, there is no mechanism to check authenticity of any tax, if deposited by the foreign giants. This plea has briefly explained the process of taxation on such services. It has stated that in OIDAR services are provided by foreign companies, when service recipient in India is registered under GST, he is liable to pay tax under reverse charge basis and when they are not registered under GST, foreign company is liable to IGST. The plea has further added that tax will be charged by OIDAR supplier only on personal consumption by an unregistered customer. Therefore, determination of liability to charge GST is based upon end use of service by the customer.
The plea has sought a strong mechanism for overseas OIDAR like it has for others by which there is strong tax collection, compliance, and reporting mechanism through various types of periodical returns, GST audit from independent auditors and also other machinery provisions.
He said foreign OIDAR service providers such as Facebook Inc, Twitter Inc, Google etc. are earning in great amount from Indian customers. However, the administration of the provisions of the Act is a cause of concern.

For example, Amazon Web Services, Inc is established in the United States and has a large consumer base in India. IGST is payable on sales to non-business consumers in India. Accordingly, the company requires users of its services for business purposes and who are GST registered to provide the businesses GSTIN and address to which the GSTIN is registered. This ensures that IGST is not charged from such businesses on their purchase from Amazon web services inc. In all other cases, IGST is charged on making purchase on the Amazon Web Service Marketplace.

Petitioner also sought direction to the GST authorities to provide data as to how many persons located in a non-taxable territory are providing OIDAR services in India.

To read the official judgement, click here

FAQ :

The petition seeks a mechanism for the Indian government to track the Goods and Services Tax (GST) paid by foreign companies providing Online Information Database Access and Retrieval (OIDAR) services in India.

The petition specifically mentions Facebook, Amazon, Google, and Twitter, along with other providers of OIDAR services from foreign jurisdictions.

The petitioner states that the government lacks a mechanism to track the total GST paid on OIDAR services used by non-registered Indian recipients and to verify the authenticity of taxes deposited by these foreign companies.

A three-judge bench of the Chief Justice has issued a notice to the central government and is considering amending the GSTR-5A form or introducing a new form to reflect revenue generated from these services.

The petition was filed by Pradeep Goyal, seeking directions for the Centre to establish a system for verifying receipts and checking GST compliance by foreign online service providers.