In a major setback to many BPOs, exporters, captive units of multinationals that supply services to other companies outside India, the Gujarat High Court said that the GST levied on these is constitutional. This would mean that these entities will have to cough up 18% additional GST, like any other domestic companies on such services provided to companies based outside India.
The High Court in a ruling on Thursday however asked the revenue department to consider the representations made by the petitioners in this regard. Indenting agents of foreign clients had filed a writ petition in the Gujarat High Court challenging the applicability of 18 percent IGST on export services. The petitioners said that this was unconstitutional.
Due to certain provisions in the current GST law indenting agents have to pay tax on services rendered in India but if they open an office in Dubai, Hong Kong or Sri Lanka, they are exempted. The agents exporting services and earning foreign exchange feel they are being penalised for qualifying as “intermediary” under Section 2(13) of the CGST Act.
Read More at: https://economictimes.indiatimes.com/news/economy/policy/supply-of-services-by-intermediaries-outside-india-is-not-an-export-should-be-taxed-at-18-gujarat-high-court/articleshow/77263477.cms