There are three parties involved in this transaction viz. (1) USA , (2) INDIA , (3) BANGLADESH. For the sake of brevity the name of these parties is also their respective location of principal place of business. USA provides cloud based "software as a service" (SAAS) to its customers. On the payment of requisite fees USA provides the login credentials to subscribe and use the SAAS that it provides. INDIA has a client called BANGLADESH. INDIA procures the SAAS for BANGLADESH from USA. The transaction is routed in such a way that USA provides the login credentials directly to BANGLADESH on the behest of INDIA. USA bills the requisite amount to INDIA but directly provides the login credentials to subscribe to his SAAS to BANGLADESH (like the "bill to-ship to" model of providing goods).
notification no. 10/2017 IGST(Rate) provides for RCM on services provided by persons resident in non-taxable territory to person resident in taxable territory.
Whether or not this transaction comes within "import of services"
please give your answers with reference to the following sections of the IGST act.
sec 2(11) import of service
sec 2(14) location of the recipient of services
sec 2(15) location of the supplier of services
sec 2(17) OIDAR
sec 13 Place of supply of services where location of supplier or location of recipient is outside India.
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RCM on import of service.
Replies (5)
NO IT CANNOT BE IMPORT SERVICES:
1. As per Defination of Import Services in term of Section 2(11) IGST Act , the place of supply of services should be in India & in your case which is in Bangladesh.
2.As per the definition of Location of the Recepient in term of Section 2(16) IGST Act Where the supply is reced at place of Business. , but the supply is reced at Bangladesh which is not your place of business registered.
AND as per Section 13(12) Of IGST Act , the POS is the location of Recepient. But actually the Services is being provided in Bangladesh. So it does not cover under Import Services.
Moreover , in case of Services the Bill to Ship module cannot be applicable.
1. As per Defination of Import Services in term of Section 2(11) IGST Act , the place of supply of services should be in India & in your case which is in Bangladesh.
2.As per the definition of Location of the Recepient in term of Section 2(16) IGST Act Where the supply is reced at place of Business. , but the supply is reced at Bangladesh which is not your place of business registered.
AND as per Section 13(12) Of IGST Act , the POS is the location of Recepient. But actually the Services is being provided in Bangladesh. So it does not cover under Import Services.
Moreover , in case of Services the Bill to Ship module cannot be applicable.
But what about the provisions of sec 13(12) where a legal fiction is created vis-a-vis place of supply of OIDAR services. If any of the two non- contradictory conditions are satisfied the person receiving such services shall be deemed to be in taxable territory:-
a) the location of address presented by the recipient ofservices through internet is in the taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;
(c) the billing address of the recipient of services is in the taxable territory;
(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;
(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable
territory;
(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory
(g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory.
also sec 2(16) (d) in absence of places mentioned in sub- clause (a) , (b) and (c) the place of usual residence of the recipient shall be deemed to the place of recipient of services.
also sec 13(13) provides power to the Government to notify any descripttion of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.
A combined reading of sec 13(13) and sec 13(12) suggests that the government may specify services or circumstances the place of supply shall be the place of effective use and enjoyment of services and thus prior to any such specifications or notification the place of supply may be deemed to be in India as per sec 13(12k even if such supply has not occurred within India thereby dragging such supply within the meaning of Import of services as defined in sec 2(11). And thus also subjecting such a supply to RCM.
a) the location of address presented by the recipient ofservices through internet is in the taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;
(c) the billing address of the recipient of services is in the taxable territory;
(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;
(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable
territory;
(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory
(g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory.
also sec 2(16) (d) in absence of places mentioned in sub- clause (a) , (b) and (c) the place of usual residence of the recipient shall be deemed to the place of recipient of services.
also sec 13(13) provides power to the Government to notify any descripttion of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.
A combined reading of sec 13(13) and sec 13(12) suggests that the government may specify services or circumstances the place of supply shall be the place of effective use and enjoyment of services and thus prior to any such specifications or notification the place of supply may be deemed to be in India as per sec 13(12k even if such supply has not occurred within India thereby dragging such supply within the meaning of Import of services as defined in sec 2(11). And thus also subjecting such a supply to RCM.
Dear Siddhesh
Iam not technically sound in computer application, but As per your query , as Login & password is provided to Bangladesh means the Services being provided on System (Computer) situated at Bangladesh.
Now If we go through the definition of Import Services u/s 2(11) IGST Act ,
The supplier of Services is located outside India (USA)
The Recepient of services is located in India , Where actually the services not being provided infact the System (Computer) On which the services being provided is situated .at Bangladesh .
So it's not even fulfills the basic requirements for Import , hence cannot be Import.
Yes you are correct in term of Section 13(13) empower the Govt to notify supplies whose POS ,shall be based on effective use & Enjoyment & the same is done by council by issuing latest Notification 4/2019 IGST , that services related to pharmaceutical sector the POS will location of Recepient, but it does not relates to your query . Means, , I want to say that to bring any such rule in force the Govt Notify it by issuing Notification & as of today there is no such Notification issued in this regard
Hence I think it cannot be Import.
Note : You can file application for AAR on same .
Iam not technically sound in computer application, but As per your query , as Login & password is provided to Bangladesh means the Services being provided on System (Computer) situated at Bangladesh.
Now If we go through the definition of Import Services u/s 2(11) IGST Act ,
The supplier of Services is located outside India (USA)
The Recepient of services is located in India , Where actually the services not being provided infact the System (Computer) On which the services being provided is situated .at Bangladesh .
So it's not even fulfills the basic requirements for Import , hence cannot be Import.
Yes you are correct in term of Section 13(13) empower the Govt to notify supplies whose POS ,shall be based on effective use & Enjoyment & the same is done by council by issuing latest Notification 4/2019 IGST , that services related to pharmaceutical sector the POS will location of Recepient, but it does not relates to your query . Means, , I want to say that to bring any such rule in force the Govt Notify it by issuing Notification & as of today there is no such Notification issued in this regard
Hence I think it cannot be Import.
Note : You can file application for AAR on same .
Dear Sir,
I totally agree that the place of supply of services is not in India. I just wanted to know whether since this is a case of OIDAR services the place of supply can be deemed to be in India u/s 13(12). I'm just an articled assistant with a curious mind. My boss won't entertain the notion of filing an AAR to satisfy my curiosity. Although I can't say that I'm completely satisfied with the arguments that you've provided I'm grateful for your time and thoughts in this matter. Hopefully, in time I'll be back with more such queries for debate.
I totally agree that the place of supply of services is not in India. I just wanted to know whether since this is a case of OIDAR services the place of supply can be deemed to be in India u/s 13(12). I'm just an articled assistant with a curious mind. My boss won't entertain the notion of filing an AAR to satisfy my curiosity. Although I can't say that I'm completely satisfied with the arguments that you've provided I'm grateful for your time and thoughts in this matter. Hopefully, in time I'll be back with more such queries for debate.
DEAR
YOU ARE ALWAYS WELCOME
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