Situation-1: XYZ, Belgium had exported the goods to a customer in West Bengal. Subsequently, some repair was required to be carried out on these goods. On the instructions of XYZ, Belgium, PQR, Maharashtra (India) had carried out these repairs at West Bengal and amount for the same was recovered from XYZ, Belgium. Query: Whether PQR is required to pay GST on the amount received from XYZ? If yes, XYZ need to pay CGST + SGST or IGST?
Situation-2: XYZ, Belgium exported the goods to PQR(Maharashtra) India. On receiving the goods, it was observed that some repair was required to be carried out on it which was done by PQR himself in their factory in Maharashtra where goods were received. The charges for repairs was recovered by PQR from XYZ. Query: Whether PQR is required to pay GST on the amount received from XYZ? If yes, XYZ need to pay CGST + SGST or IGST?

ANSWER

Facts of the case:
Goods were imported and some repairs were carried out on the same. Consideration was recovered for the work done.

Law Applicable:
1. The Place of supply under subsection (3) of section 13 is dictated as follows;

*(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:

Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:

Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process;"

2. Section 2(6) of IGST defines export of service as follows;
"'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; 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;"

Interpretation:
Place of supply in case of services, like repairs and rework, for which goods are required to be made physically available by the recipient to the supplier is decided u/s 13(3) IGST. However the second proviso to clause (a) of the said sub section excludes the cases where goods are temporarily imported for repairs and then exported without being put to any use.
Therefore these POS for these cases would be decided by section 13(2) i.e Location of Recipient of services which in your case is Belgium.
This is therefore an Export of services if forex is earned and all the conditions of section 2(6) IGST are fulfilled to be defined as an Export of Service.

It is important to note here that, the case will be covered by second proviso to 13(3)(a) only if
(1) Goods are exported after repair ;and;
(2) Goods are not put to any other use

If above conditions are not fulfilled then POS u/s 13(3)(a) would be Location of supplier of service,i.e India and CGST + SGST would apply.

Conclusion:
CASE 1: If goods are exported after repair without being put to any other use
POS u/s 13(2) is Belgium.
If forex is earned and all conditions of 2(6) IGST are fulfilled then this is export of service.
No tax will be levied rather a refund of ITC will be granted under rule 89(4) CGST.

CASE 2: If goods are not exported after repair without being put to any other use
POS u/s 13(3)(a) is India.
CGST + SGST will be levied.

Footnote: In your query you have raised two situations, one where directions of rework are received from the foriegn party and the other where rework is carried out on own accord. It is highlighted to you here that the two situations are identical since section 7 CGST does not differentiate between the case where supply is carried out on the request of supplier or on the request of receiver. What constitutes a supply is the element of consideration and the act to do (or not do) something in return for that consideration.
Therefore, the above answer would apply in both the situations raised by you. (Reply dt. 07/12/2021)