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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 ..... ioned 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 the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as "KGST Act" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishment 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 provided under KGST Act 2017, made applicable to IGST Act vide section 2(24) of IGST Act 2017. "Person" has been defined under sub-section (84) of the section 2 of the KGST Act 2017, as under: (84) "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 Further, perusal of the Explanation 2 to section 8 of the IGST Act suggests that if a foreign company is conducting business in India through a branch or an agency or a representational office, then the said branch or agency or representational office of the foreign company, located in India, shall be treated as establishment of the said foreign company in India. Similarly, if any company incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is incorporated in India, then the said company incorporated in India will be considered as a separate "person" under the provisions of KGST 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 in India and a body corporate incorporated by or under the laws of a country outside India, which is also referred to as foreign company under Companies Act, are separate persons under KGST Act, and thus are separate legal entities. Accordingly, these two separate persons would not be considered as "merely establishments of a distinct person in accordance with Explanation 1 in section 8". 5.2 Therefore, supply of services ..... X X X X Extracts X X X X X X X X Extracts X X X X
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