QUESTION

1) Whether following activities are amounts to IMPORT OF SERVICE, if YES whether IGST is payable on the same & can tax payer avail the credit of the same 2) Whether there is any Specific Exemption because same are International Govt. organization ? 3) Whether Place of Supply will be Place of performance of the service criteria will come in Picture for any of the service. and virtue of the same if place or performance and place of supply is outside India then NO GST will be applicable as it will not be treated as a Import of Service ?? Cases : 1) WHO ( world health organization) provided certificate to Parma Company in INDIA and by virtue of this certificate this Indian company can make the exports of Parma product in international market. WHO charges in USD to Indian company 2) EDQM ( European Drug Quality Management) company charges Indian company in USD for rendering service a) Inspection/Testing / validation of Goods as per quality files sent by exporter along with Export Goods, activity done OUTSIDE INDIA. for these services EDQM charges in USD to Indian company 3) In another case EDQM them self prepare Drug Control file for Testing of goods supplied by Indian Parma company and accordingly charge in USD for both preparation of file as well as testing of the goods. 4) Vendor of this Parma company incurred some expenses outside India such as Traveling, food, stay and other expenses but outside India and This Indian Parma company paid in USED as a reimbursing. Whether GST is required to be paid as a Import of Service

ANSWER

Facts of the case:  Parma Company receives certificate from WHO on the basis of which goods are exported.

Law Applicable: SECTION 2 of IGST Act
(11) ''import of services' means the supply of any service, where''
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India;

SECTION 13 of IGST Act
(2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services:

Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services.

(3) The place of supply of the following services shall be the location where the services are actually performed, namely:'

(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:

Interpretation:
Query 1: As per the understanding of your question and the common trade parlance in Parma sector it can be comprehended that some of the sample medicines are supplied to WHO on the basis of which a certification is provided by WHO. On the basis of this certificate, Parma company then exports the medicines.

1) Yes, such supply would be import of service. IGST would be payable and ITC of such ITC can be availed.

2) No there is no specific exemption in relation to such supply.

3) Place of supply cannot be as per section 13(3)(a) as this clause is applicable only for the services supplied in respect of goods which are required to be made physically available and not on the rest of the goods. In our case, the goods which are being sent on sample basis are only the goods that are availing services on the goods performed. The rest of the stock has not been physically made available and hence cannot fall under clause 13(3)(a).

It will fall in section 13(2) and the POS will be the place of supply shall be location of recipient of service.

Query 2: Mode of payment is in USD or in INR is not a decisive factor to determine whether it is a an import or not.

Similarly, if all the goods are sent for testing/inspection, i.e if all the goods are made physically available and services are supplied in respect of all such goods that have been sent for testing/inspection then the place of supply would be determined on the basis of Section 13(3)(a). But if all the goods are not made physically available and only sample is sent for testing/inspection then the Place of supply would fall under section 13(2) and would be the location of recipient of service, i.e, India.

Query 3: In case both the preparation of file and testing/inspection is performed by the company outside India, then the determination of POS would depend on the invoicing. In case a combined invoice is prepared, then the POS would be decided by first determining whether the supply is a mixed supply or a composite supply. This would be decided on the basis of trade parlance (whether the bundle is an artificial bundle or a natural bundle). Although if the invoicing is done separately then for inspection, it would be same as stated in the query above. For preparation of file, the POS would be determined as per Section 13(2), i.e location of recipient of service i.e, India and therefore import. IGST would be levied.

Query 4: This case involves two transactions. For the first transaction, the employee is bearing expenses outside India i.e. in NTT and hence there is no question of GST. In the second leg of the transaction, the employer is reimbursing the employee for expenses borne by him. Such expenses are borne by virtue to employer employee relationship among them and thus would be covered under Schedule 3 and hence not attract GST.

Import is decided as per the POS. If in the above cases the POS is India, GST would be livable, the company would be able to claim ITC.