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Place of supply and type of GST payable

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Kaustubh Ram Karandikar

Corporate Consultant- Central Excise &am

404 Points Posted on 29 November 2021

XYZ(India) imported goods from PQR(UK). These goods were found defective and XYZ did the repairs in India and recovered the repairing cost from the foreign supplier viz. PQR(UK). In my view, this will fall under Section 13(3) of IGST Act, and as per that since the services are performed in India, XYZ is required to pay GST i.e., CGST + SGST since place of supply is India. However, while filing returns / paying tax, by default it is taking IGST and not allowing to pick up CGST + SGST. Views of the experts please.

Replies (1)

CA Akshay Hiregange

Partner - Audit & Assistance

3708 Points Posted on 29 November 2021

The servicing is done by a repair person in India for XYZ (India). If yes, then how is there a supply by XYZ to PQR? The recovery of money towards repairs if done at actuals would be a financial transaction only.

Also, the concept of liquidated damages has been disputed in the courts, and more often that not the decision is in favour of the assessee and service tax/GST is not applicable on compensatory value.

If value is high suggest you to take a written expert opinion. In my view no tax payable, even if paid can be reversed in next month return/refund can be applied for.