Question

1. We are giving assistance to one foreign party in selling its goods in India on commission basis as good as agent. And we received commission in Foreign Currency. In this case please suggest whether GST is applicable or not? If yes how? 2. One of our agent is in Japan and he is looking after sales of our goods in Japan only, for which we give commission to him from India in foreign currency. In this case please suggest whether GST is applicable or not? If yes how?

Answer

1. Service is considered as export of service if all the conditions given in section 2(6) of IGST are fulfilled i.e.
'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.
You are providing intermediary service so the place of supply as per section 13(8) of IGST Act in case of intermediary services is the location of supplier of service i.e. India. Therefore it not an export of service and GST will be applicable on commission received.

2. Import of service is defined under section 2(11) of IGST Act as follows:

''import of services' means the supply of any service, where''
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India

In your case as the Place of supply is the place of intermediary i.e. outside India, therefore it is not an import of service and hence GST is not applicable. (Reply dt.12/11/2018)