CA Sapna Ghelani
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.
- 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
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