Question

XYZ(India) paying consideration to PQR, Germany (Parent company) for providing technical knowledge, designing of product and after sale service in relation to products manufactured by XYZ in India. The amount payable to PQR would depend on sales value of goods sold by XYZ. Is XYZ liable to pay GST on the amount paid to PQR?

Answer

This is a case of import of service. As per Notification-10 of Integrated tax (Rate) any service supplied by any person who is located in a non-taxable territory(outside India) to any person located in taxable territory (within India) then tax shall be paid by the recipient of service under reverse charge mechanism and the entry relating to same notification is reproduced below

The taxability of service under different situations will be as follows:-

(1)Consultancy for designing and technical know-how of the Product is subjected to GST.
(2) After sale service
(a) consultancy regarding providing of after sale service, technical Know-how for it or system designing etc. for it subjected to GST.
(b) If PQR is doing any service of repairing or reworking on the physical goods outside india then it will not be cover under GST because the place of supply and location of supplier both are outside india.(Reply dt.22/02/2019)