PLACE OF SUPPLY OF GOODS OR SERVICES PART-III

GST Update 04.03.2017-PLACE OF SUPPLY OF GOODS OR SERVICES PART-III

GST DAILY DOSE OF UPDATION
PLACE OF SUPPLY OF GOODS OR SERVICES PART-III:-
SECTION 10: PLACE OF SUPPLY OF SERVICES WHERE THE LOCATION OF THE SUPPLIER OR THE LOCATION OF THE RECIPIENT IS OUTSIDE INDIA
In continuation to our earlier update, we shall discuss some other provisions of section 10. According to sub-section (8), the place of supply of certain services like banking, intermediary and short term hiring of transport upto one month shall be the location of service provider. This provision is in alignment with the Rule 9 of the Place of Provision of Service Rules, 2012 which also provides that in case of intermediary services, the place of supply of service shall be the location of service provider. Moreover, the definition of intermediary is also given under section 2(13) of the IGST Act to mean a broker, an agent, or any other person, by whatever name called, who arranges or facilitates the supply of service or supply of goods between two or more persons but does not include a person who provides the main service or supplies the goods on his own account. It is pertinent to mention here that the intermediary includes person who facilitates supply of goods or services. This is appreciated as there was lacunae in the definition of intermediary wherein only person facilitating supply of services was covered. This had the effect that no service tax was leviable in case of services of intermediary located abroad was availed with respect to services but service tax was levied in case of intermediaries facilitating supply of goods and situated abroad. However, this lacunae was removed with effect from 01.10.2014 and as of now, intermediary includes both facilitating supply of goods or services. The incorporation of rectified definition of intermediary in the GST law is highly appreciated.
The other provisions pertaining to determination of place of supply in case of transportation of goods being destination of goods, in respect of transportation of passengers being place of embarkation and supply of services on boarding a conveyance being first scheduled departure of conveyance for journey are same as contained in the Place of Provision of Service Rules, 2012. However, the major change that has continued in the GST regime is regarding place of supply of service for online information and database access or retrieval services (OIDARS). It is worth mentioning that earlier, the OIDARS was covered under Rule 9 of the Place of Provision of Service Rules, 2012 wherein the place of supply for such services was the location of service provider. However, w.e.f. 01.12.2016, the clause (b) of Rule 9 pertaining to OIDARS has been deleted thereby meaning that the general rule shall be applicable for OIDARS. Moreover, special mechanism has been developed wherein the service provider located outside India and providing such OIDARS shall be liable to pay service tax under forward charge. The drastic amendment has been imported in the proposed GST regime also wherein a new sub-section 12(a) has been inserted to provide that the place of supply in case of OIDARS shall be the location of service recipient. Not only this, a deeming fiction has been created whereby person receiving OIDARS shall be deemed to be located in taxable territory if any two of the following conditions are satisfied as follows:-
a) Location of address given by the recipient is in taxable territory
b) Credit/debit card or any other cards used for payment has been issue in taxable territory
c) Billing address of recipient is in taxable territory
d) IP address of device is in taxable territory
e) Bank of recipient in which account is used for payment is in taxable territory
f) Country code of SIM is in taxable territory
g) Location of fixed land line through which service is received by recipeint is in taxable territory.
A special provision for taxability of OIDARS has been incorporated in section 12 of the IGST Act wherein supplier of service located in non-taxable territory has been made liable to pay IGST. The provisions are similar to the recent amendments made in the Service Tax Laws. Not only this, meaning of OIDARS has been given as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as
(a) advertising on the internet;
(b) providing cloud services;
(c) provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;
(d) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
(e) online supplies of digital content (movies, television shows, music, etc.);
(f) digital data storage; and
(g) online gaming;
The above meaning is also in line with the meaning revised recently in Service Tax Laws. It appears that the provisions of Place of Provision of Service Rules, 2012 presently in force have been taken as base while framing the Rules for determination of Place of Supply in GST regime. Determination of Place of supply is not an easy task and so incorporating provisions presently in force in Service Tax Laws will be convenient for assessees in the new GST regime.
Visit us at www.capradeepjain.com and also at
https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/

Comments

GST Update 04.03.2017-PLACE OF SUPPLY OF GOODS OR SERVICES PART-III

Post a Comment

Query