A agency engaged within the enterprise of offering software program associated consultancy companies in Oracle ERP approached the Tamil Nadu bench of the AAR searching for ruling on whether or not the companies offered by it to overseas consumer of a GST-registered IT firm, Doyen Systems, shall be handled as export of companies.
In the stated case, the unique contract was between Doyen Systems and the US consumer, and part of the service was contracted to the applicant agency, who can be paid consultancy payment for his companies.
The applicant had entered into settlement with Doyen Systems.
The overseas consumer was to pay consideration to Indian IT firm and as per independently agreed upon contract worth, which had no relevance/reference to contract between Doyen Systems and the applicant.
Applicant was of the view that he instantly rendered the service to overseas consumer and was paid consideration by Doyen Systems on behalf of overseas firm.
The AAR whereas passing its ruling stated there are two units of contract — one between applicant and Doyen Systems for offering skilled and consultancy companies, and second between Doyen Systems and its overseas consumer for offering software program assist companies.
The applicant isn’t get together to the second contract.
AAR noticed that applicant’s competition of being an agent to Doyen Systems can’t be substantiated merely as a result of the applicant is in e-mail correspondence with the workers of overseas purchasers of the Indian firm.
It doesn’t suggest that he’s ‘carrying on the enterprise of provide of companies’ on behalf of firm as required underneath definition of agent.
The AAR stated that the applicant gives companies as a ‘Consultant’ engaged by Doyen Systems’.
“The services provided by the applicant to Doyen Systems Pvt Ltd is a supply of services under CGST/TNGST Act and the applicant is liable to pay relevant tax on such supply,” the AAR stated.
AMRG & Associates Senior Partner Rajat Mohan stated the Authority has dominated that taxpayers offering info expertise software program associated companies to abroad consumer of an Indian enterprise can be liable to pay GST on the charge of 18 per cent.
“The Government should contemplate and pass on a tax neutral status to services sector for all indirect exports, as the procedural law has matured and technology is stable after three years of implementation. With this tweaking, GST would move to phase–II of ‘Ease of Doing Business’, whereby overall cost of capital in IT services sector could be further rationalised,” Mohan added.
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