Question

XYZ(India) providing engineering service (Design, drawing etc) to PQR, Germany (Parent company). Services are provided online from India. Invoice would be raised by XYZ on hourly basis and rate. Is XYZ liable to pay GST on the amount received from PQR?

Answer

Point 1: Is this OIDAR service ?
Just because the services are provided online via internet would not classify them as OIDAR. Since no information or database is accessed through online internet rather only a service is provided via internet because of the geographic boundaries between the service provider and receiver therefore this is not OIDAR service

Point 2: POS of Supply
As per 13(2) POS will location of recipient ( assuming that it is recorded in ordinary course of business ) that is Germany.

Point 3: Is this export ?
As per SECTION 2(6) of IGST Act
'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; 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;

If all above are satisfied then this is export of service.

Point 4: Are these merely establishments of a distinct person ?
As per Explanation 1 in section 8 :
.''For the purposes of this Act, where a person has,''
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State; or
(iii) an establishment in a State or Union territory and any other establishment registered within that State or Union territory,
then such establishments shall be treated as establishments of distinct persons.

Since the company in India has a different registration under Indian PAN and the German Parent company is a separate identifiable PERSON in the eyes of law therefore the two units can not be said to be under the same person.

Conclusion: This is export of service eligible for refund of GST. (Reply dt.09/03/2019)