Example
ABC Ltd., manufacturer of electronic items is a Singapore based
Company. It wants to launch its products in India. ABC Ltd. seeks the advice of
XYZ consultants, an Indian Company to know about the requirements and interest
of Indian people so as to make changes in its products. For this service XYZ
Ltd. charged $10,000. In addition to this it provides following services like:
1. Services relating to developing of customers in India. For
this it charged commission $ 10,000
2. XYZ Ltd. organises an event in India for ABC Ltd. For this it
charged $ 5000
ABC Ltd. makes payment in convertible foreign exchange.
Determine Place of supply of service provided by XYZ Ltd.?
Whether it will be considered as Export of service?
Answer
Service of Consultancy
Place of supply is determined as per section 13 of
IGST Act in case where the location of supplier or location of recipient is
outside India.
The given case does not fall under Section 13(3) to 13(13), therefore the
residuary clause 13(2) will apply and the place of supply will be the location
of recipient of service i.e. Singapore.
Further, the definition of Export of service is given under section 2 of IGST
Act as follows:
(6) 'export of services' means the supply of any service when,"
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of
service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely
establishments of a distinct person in accordance with Explanation 1 in section
8;
In the given case, since all the above conditions are fulfilled, therefore it is
export of service.
Developing Customers in India
XYZ Ltd. is providing intermediary service relating to developing of
customers. Place of supply as per section 13(8) of IGST is the location of
supplier of service i.e. India (location of XYZ Ltd.)
Further in this case condition (iii) of Export of service is not satisfied, it
is not considered as Export of service.
Organizing an Event
Place of supply as per section 13(5) shall be the place where the event is
actually held i.e. India.
As the condition (iii) of Export of service is not satisfied, it is also not
considered as Export of service.