QUESTION

XYZ(India) is providing Engineering & Tendering Documentation Service to PQR, Finland and nature of services are given below: Tendering Documentation service which will include the following: Preparation of Budget and Firm Tenders for various projects Attend meetings with customers / Buyer for providing clarifications and ensuring complete handover of orders to the Buyer. Engineering Documentation service which will include the following: Preparation of order related drawings and its revision wherever required. Detailed drawings for product development projects Drawings needed for tenders  The services are provided by sitting in India or sometimes the representatives of XYZ need to go to Finland in relation to providing these services. The amount received by XYZ from PQR is in foreign currency. Whether XYZ is required to pay GST on the amount received from PQR?

ANSWER

FACTS OF THE CASE:

XYZ(India) is providing Engineering & Tendering Documentation Service to PQR, Finland. The services are provided by sitting in India or sometimes the representatives of XYZ need to go to Finland. The amount received by XYZ from PQR is in foreign currency. Whether XYZ is required to pay GST on the amount received from PQR?

LAW APPLICABLE:
SECTION 2 of IGST Act

(6) 'export of services' means the supply of any service when,''
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; 1[or in Indian rupees wherever permitted by the Reserve Bank of India] and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

REPLY:
If the documents are tendered Outside India relating to:
1. Budget tender for various Projects.
2. Drawing for Product development
3. Drawing needed for tenders
4. Revision of Drawing

and these are used by the customers located Outside India, then all the services mentioned above will be considered as Export of Service.
The Place of Supply in this case is Outside India.
Please take care that other conditions mentioned in section 2(6) of IGST Act are duly fulfilled.

In case of Services for attending meetings with customers/buyer for providing clarifications and ensuring complete handover of orders to the Buyer:
(I) If the meeting is held in India, then it is not Export of service.
(II) If the meeting is held Abroad, then it is Export of Service. (Reply dt. 06/09/2021)