TMI BlogClarification relating to export of services-condition (v) of section 2(6) of the IGST Act 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 reg. Various representations have been received citing ambiguity caused in interpretation of the Explanation 1 under section 8 of the IGST Act 2017 in relation to condition (v) of export of services as mentioned in sub-section (6) of the section 2 of the IGST Act 2017 . Doubts have been raised whether the supply of service by a subsidiary/ sister concern/ group concern, etc. of a foreign company in India, which is incorporated under the laws in India, to the foreign company incorporated under laws of a country outside India, will hit by condition (v) of sub-section (6) of section 2 of IGST Act . 2. The matter has been examined. In view of the difficulties being faced by the trade and industry and to ensure uniformity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. As per the above Explanation, an establishment of a person in India and another establishment of the said person outside India are considered as establishments of distinct persons. 3.3 Reference is also invited to the Explanation 2 of Section 8 of IGST Act , which is reproduced below: Explanation 2. A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. 3.4 Reference is also invited to the definition of person as pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner. Analysis of the issue: 4.1 Clause (v) of sub-section (6) of section 2 of IGST Act , which defines export of services , places a condition that the services provided by one establishment of a person to another establishment of the same person, considered as establishments of distinct persons as per Explanation 1 of section 8 of IGST Act , cannot be treated as export. In other words, any supply of services by an establishment of a foreign company in India to any other establishment of the said foreign company outside India will not be covered under definition of export of services. 4.2 Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2 of the CGST Act, 2017 and the definitions of company and foreign company under Section 2 of the Companies Act, 2013 , it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate person under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a subsidiary/ sister concern/ group concern of any foreign company which is incorporated in India, then the said company incorporated in India will be considered as a separate person under the provisions of CGST Act and accordingly, would be considered as a separate legal entity than the foreign company. Clarification: 5.1 In view of the above, it is clarified that a company incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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