Determination of export or service and place of supply

11 October 2018
1. Mr. A is getting handling services fees for all shipments originating between Port territory of India and Port Territory of other country from Mr. B.
2. Mr. B, who is located outside India, having no PE in India, looks after all the transport, freight, Handling services, etc... for Person C(Foreign Party).
3. Mr. B raises Bill on Mr. C and Mr. B is liable to pay Mr. A only part of service provided by Mr. A i.e. handling services between Port territory of India and Port Territory of other country. So, Mr. A raises Bill on Mr. B in foreign currency and also receives fees from foreign bank. Also Handling Service fees is of fixed amount for each shipment or container.

My question is:
Whether it is consider as export of service or not, as
1. Service Receiver has no PE in India
2. Payment is received in foreign currency
3. Service is provide on ship i.e.between Port territory of India to Port territory of other country

2. If it consider as export of service than whether GST is applicable? As per my understanding it should not, if export of service.

Rajesh Kumar (Expert)
11 October 2018
Mr. A is supplying services to Mr. B. As one of the party is located outside India, Section 13 of the IGST Act is applicable to determine the place of supply. Place of supply shall be location of recipient of services, that is location of B, outside India. Export of services has been defined under Section 2(6) of the IGST Act, and as all the conditions of the said definition is satisfied, the transaction amounts to export of service.
GST is applicable even on supply export. Either one can export without payment of tax, by following bond procedure; or supply with payment of tax and seek refund of IGST paid under Rule 96 of the CGST Rules.

Dipesh J. Baghmar (Querist)
12 October 2018
Thank You so much sir for your reply. Can we apply for LUT instead of bond? and export service without payment of IGST... Thanks is advance

Rajesh Kumar (Expert)
17 October 2018
Yes, you can apply for LUT and export without payment of IGST.

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