Panaji, 26th October, 2021 (Kartika 4, 1943)
SERIES II No. 30
PUBLISHED BY AUTHORITY
EXTRAORDINARY
GOVERNMENT OF GOA
Department of Finance
Office of the Commissioner of Commercial Taxes
––
No. CCT/26-4/2017-18/E/1872
Circular
(No. 12/2021-22-GST)
Subject: Clarification on doubts related to scope of
“Intermediary”-reg.
Representations have been received citing
ambiguity caused in interpretation of the scope of
“Intermediary services” in the GST Law. The matter
has been examined. In view of the difficulties being
faced by the trade and industry and to ensure
uniformity in the implementation of the provisions
of the law across field formations, the undersigned,
in exercise of its powers conferred by Section 168 of
the Goa Goods and Services Tax Act, 2017 (hereinafter
referred to as “Goa GST Act”), hereby clarifies the
issues in succeeding paragraphs.
2. Scope of Intermediary services
2.1 ‘Intermediary’ has been defined in the sub-
section (13) of Section 2 of the Integrated Goods and
Services Tax Act, 2017 (hereinafter referred to as
“IGST” Act) as under:-
“Intermediary means a broker, an agent or any
other person, by whatever name called, who
arranges or facilitates the supply of goods or
services or both, or securities, between two or more
persons, but does not include a person who supplies
such goods or services or both or securities on his
own account.”
2.2 The concept of ‘intermediary’ was borrowed
in GST from the Service Tax Regime. The definition of
Reg. No. RNP/GOA/32/2021-2023
RNI No. GOAENG/2002/6410
‘intermediary’ in the Service Tax law as given in Rule
2(f) of Place of Provision of Services Rules,
2012 issued vide Notification No. 28/2012-ST, dated
20-6-2012 was as follows:
“intermediary” means a broker, an agent or any
other person, by whatever name called, who
arranges or facilitates a provision of a service
(hereinafter called the ‘main’ service) or a supply of
goods, between two or more persons, but does not
include a person who provides the main service or
supplies the goods on his account;”
2.3 From the perusal of the definition of
“intermediary” under IGST Act as well as under
Service Tax law, it is evident that there is broadly no
change in the scope of intermediary services in the
GST regime vis-a-vis the Service Tax regime, except
addition of supply of securities in the definition of
intermediary in the GST Law.
3. Primary Requirements for intermediary services
The concept of intermediary services, as defined
above, requires some basic pre- requisites, which are
discussed below:
3.1 Minimum of Three Parties: By definition, an
intermediary is someone who arranges or facilitates
the supplies of goods or services or securities
between two or more persons. It is thus a natural
corollary that the arrangement requires a minimum
of three parties, two of them transacting in the supply
of goods or services or securities (the main supply)
and one arranging or facilitating (the ancillary
supply) the said main supply. An activity between
only two parties can, therefore, not be considered as
an intermediary service. An intermediary essentially
“arranges or facilitates” another supply (the “main
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Suggestions are welcomed on e-mail: dir–[email protected]
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supply”) between two or more other persons and,
does not himself provide the main supply.
3.2 Two distinct supplies: As discussed above, there
are two distinct supplies in case of provision of
intermediary services;
(1) Main supply, between the two principals,
which can be a supply of goods or services or
securities;
(2) Ancillary supply, which is the service of
facilitating or arranging the main supply between
the two principals. This ancillary supply is supply of
intermediary service and is clearly identifiable and
distinguished from the main supply.
A person involved in supply of main supply on
principal to principal basis to another person cannot
be considered as supplier of intermediary service.
3.3 Intermediary service provider to have the
character of an agent, broker or any other similar
person: The definition of “intermediary” itself
provides that intermediary service provider means a
broker, an agent or any other person, by whatever
name called ....”. This part of the definition is not
inclusive but uses the expression “means” and does
not expand the difinition by any known expression
of expansion such as “and includes”. The use of the
expression “arranges or facilitates” in the definition
of “intermediary” suggests a subsidiary role for the
intermediary. It must arrange of facilitate some other
supply, which is the main supply, and does not
himself provides the main supply. Thus, the role of
intermediary is only supportive.
3.4 Does not include a person who supplies such
goods or services or both or securities on his own
account: The definition of intermediary services
specifically mentions that intermediary “does not
include a person who supplies such goods or services
or both or securities on his own account”. Use of word
“such” in the definition with reference to supply of
goods or services refers to the main supply of goods
or services or both, or securities, between two or more
persons, which are arranged or facilitated by the
intermediary. It implies that in cases wherein the
person supplies the main supply, either fully or partly,
on principal to principal basis, the said supply
cannot be covered under the scope of “intermediary”.
3.5 Sub-contracting for a service is not an
intermediary service: An important exclusion from
intermediary is sub-contracting. The supplier of main
service may decide to outsource the supply of the
main service, either fully or partly, to one or more
sub-contractors. Such sub-contractor provides the
main supply, either fully or a part thereof, and does
not merely arrange or facilitate the main supply
between the principal supplier and his customers,
and therefore, clearly is not an intermediary. For
instance, ‘A’ and ‘B’ have entered into a contract as
per which ‘A’ needs to provide a service of, say,
Annual Maintenance of tools and machinery to ‘B’.
‘A’ sub-contracts a part or whole of it to ‘C’.
Accordingly, ‘C’ provides the service of annual
maintenance to ‘A’ as part of such sub-contract, by
providing annual maintenance of tools and
machinery to the customer of ‘A’, i. e. to ‘B’ on behalf
of ’A’. Though ‘C’ is dealing with the customer of ‘A’,
but ‘C’ is providing main supply of Annual
Maintenance Service to ‘A’ on his own account, i.e.
on principal to principal basis. In this case, ‘A’ is
providing supply of Annual Maintenance Service to
‘B’, whereas ‘C’ is supplying the same service to ‘A’.
Thus, supply of service by ‘C’ in this case will not be
considered as an intermediary.
3.6 The specific provision of place of supply of
‘intermediary services’ under Section 13 of the IGST
Act shall be invoked only when either the location
of supplier of intermediary services or location of
the recipient of intermediary services is outside
India.
4. Applying the abovementioned guiding
principles, the issue of intermediary services is
clarified through the following illustrations:
Illustration 1
‘A’ is a manufacturer and supplier of a machine.
‘C’ helps ‘A’ in selling the machine by identifying
client ‘B’ who wants to purchase this machine and
helps in finalizing the contract of supply of machine
by ‘A’ to ‘B’. ‘C’ charges ‘A’ for his services of locating
‘B’ and helping in finalizing the sale of machine
between ‘A’ and ‘B’, for which ‘C’ invoices ‘A’ and is
paid by ‘A’ for the same. While ‘A’ and ‘B’ are involved
in the main supply of the machinery, ‘C’, is facilitating
the supply of machine between ‘A’ and ‘B’. In this
arrangement, ‘C’ is providing the ancillary supply of
arranging or facilitating the ‘main supply’ of
machinery between ‘A’ and ‘B’ and therefore, ‘C’ is an
intermediary and is providing intermediary service
to ‘A’.
Illustration 2
‘A’ is a software company which develops
software for the clients as per their requirement. ‘A’
has a contract with ‘B’ for providing some customized
software for its business operations. ‘A’ outsources
the task of design and development of a particular
module of the software to ‘C’, for which “C” may have
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to interact with ‘B’, to know their specific
requirements. In this case, ‘C’ is providing main
supply of service of design and development of
software to ‘A’, and thus, ‘C’ is not an intermediary in
this case.
lllustration 3
An insurance company ’ P’, located outside India,
requires to process insurance claims of its clients in
respect of the insurance service being provided by
‘P’ to the clients. For processing insurance claims, ‘P’
decides to outsource this work to some other firm.
For this purpose, he approaches ‘Q’, located in India,
for arranging insurance claims processing service
from other service providers in India. ‘Q’ contacts ‘R’,
who is in business of providing such insurance
claims processing service, and arranges supply of
insurance claims processing service by ‘R’ to ‘P’. ‘Q’
charges P a commission or service charge of 1% of
the contract value of insurance claims processing
service provided by ‘R’ to ‘P’. In such a case, main
supply of insurance claims processing service is
between ‘P’ and ‘R’, while ‘Q’ is merely arranging or
facilitating the supply of services between ‘P’ and
‘R’, and not himself providing the main supply of
services. Accordingly, in this case, ‘Q’ acts as an
intermediary as per definition of sub-section (13) of
Section 2 of the IGST Act.
Illustrations 4
‘A’ is a manufacturer and supplier of computers
based in USA and supplies its goods all over the
world. As a part of this supply, ‘A’ is also required to
provide customer care service to its customers to
address their queries and complains related to the
said supply of computers. ‘A’ decides to outsource
the task of providing customer care services to a BPO
firm, ‘B’. ‘B’ provides customer care service to ‘A’ by
interacting with the customers of ‘A’ and addressing/
processing their queries/complains. ‘B’ charges ‘A’
for this service. ‘B’ is involved in supply of main service
‘customer care service’ to ‘A’, and therefore, ‘B’ is not
an intermediary.
5. The illustrations given in para 4 above are only
indicative and not exhaustive. The illustrations are
also generic in nature and should not be interpreted
to mean that the service categories mentioned
therein are inherently either intermediary services
or otherwise. Whether or not, a specific service would
fall under intermediary services within the meaning
of sub-section (13) of Section 2 of the IGST Act, would
depend upon the facts of the specific case. While
examining the facts of the case and the terms of
contract, the basic characteristics of intermediary
services, as discussed in para 3 above, should be kept
in consideration.
6. Difficulty, if any, in implementation of this
Circular may please be brought to the notice of the
undersigned.
Hemant Kumar, IAS, Commissioner State Tax, Goa.
Panaji, 26th October, 2021.
Note:
Similar circular is issued under Central Goods
and Services Tax Act, 2017 by the GST Policy wing,
Central Board of Indirect Taxes and Customs, Department
of Revenue, Ministry of Finance, GOI, New Delhi vide
Circular No. 159/15/2021-GST dated 20th September, 2021.
———
No. CCT/26-4/2017-18/E/1873
Circular
(No. 11/2021-22-GST)
Subject: Clarification regarding extension of time
limit to apply for revocation of cancella-
tion of registration in view of Notification
No. 38/1/2017-Fin (R&C)(216)/1886 dated
27th September, 2021- Reg.
Vide Circular No. 1 /2021-22 - GST, dated 17th June,
2021, detailed guidelines for implementation of the
provision of extension of time limit to apply for
revocation of cancellation of registration under
Section 30 of the Goa Goods and Services Tax Act,
2017 (hereinafter referred to as “the Goa GST Act/
/said Act”) and Rule 23 of the Goa Goods and Services
Tax Rules, 2017 (hereinafter referred to as “the Goa
GST Rules”) have been specified, till the time an
independent functionality for extension of time limit
for applying in FORM GST REG-21 is developed on
the GSTN portal. It may be noted that Notification
No. 38/1/2017-Fin(R&C)(199)/1408, dated 25th May,
2021, as amended, had, inter-alia, extended the date
of filing of application for revocation of cancellation
of registration till 30th June, 2021, where the due
date of filing of application was falling between 15th
April, 2021 to 29th June, 2021. Government has now
issued Notification No. 38/1/2017-Fin (R&C)(216)/
/1886 dated 27th September, 2021 (hereinafter
referred to as “the said notification”) under Section
168A of the said Act to extend the timelines for
filing of application for revocation of cancellation
of registration to 30th September, 2021, where the
due date of filing of application for revocation of
cancellation of registration falls between 1st March,
2020 to 31st August, 2021. This extension is
applicable for those cases where registrations have
been cancelled under Clause (b) or Clause (c) of sub-
-section (2) of Section 29 of the said Act.
2. In order to ensure uniformity in the
implementation of the said notification across field
formations, the undersigned, in exercise of its powers
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conferred by Section 168 of the said Act, hereby clari-
fies the issues relating to the extension of timelines
for application for revocation of cancellation of
registration as under:
3. Applications covered under the scope of the
said notification.
3.1. The said notification specifies that where
the due date of filing of application for revocation
of cancellation of registration falls between
1st March, 2020 to 31st August, 2021, the time limit
for filing of application for revocation of
cancellation of registration is extended to 30th
September, 2021. Accordingly, it is clarified that
the benefit of said notification is extended to all
the cases where cancellation of registration has
been done under clause (b) or clause (c) of sub-
section (2) of Section 29 of the Goa GST Act, 2017
and where the due date of filing of application for
revocation of cancellation of registration falls
between 1st March, 2020 to 31st August, 2021. It is
further clarified that the benefit of notification
would be applicable in those cases also where the
application for revocation of cancellation of
registration is either pending with the proper officer
or has already been rejected by the proper officer.
It is further clarified that the benefit of notification
would also be available in those cases which are
pending with the appellate authority or which have
been rejected by the appellate authority. In other
words, the date for filing application for revocation
of cancellation of registration in all cases, where
registration has been cancelled under clause (b) or
clause (c) of sub-section (2) of Section 29 of Goa
GST Act, 2017 and where the due date of filing of
application for revocation of cancellation of
registration falls between 1st March, 2020 to 31st
August, 2021, is extended to 30th September, 2021,
irrespective of the status of such applications. As
explained in this para, the said notification would
be applicable in the following manner:
(i) application for revocation of cancellation of
registration has not been filed by the taxpayer-
In such cases, the applications for revocation can
be filed upto the extended timelines as provided
vide the said notification. Such cases also cover
those instances where an appeal was filed against
order of cancellation of registration and the appeal
had been rejected.
(ii) application for revocation of cancellation of
registration has already been filed and which are
pending with the proper officer-
In such cases, the officer shall process the
application for revocation considering the extended
timelines as provided vide the said notification.
(iii) application for revocation of cancellation of
registration was filed, but was rejected by the proper
officer and taxpayer has not filed any appeal against
the rejection-
In such cases, taxpayer may file a fresh
application for revocation and the officer shall
process the application for revocation considering
the extended timelines as provided vide the said
notification.
(iv) application for revocation of cancellation of
registration was filed, the proper officer rejected the
application and appeal against the rejection order is
pending before appellate authority-
In such cases, appellate authorities shall take the
cognizance of the said notification for extension of
timelines while deciding the appeal.
(v) application for revocation of cancellation of
registration was filed, the proper officer rejected the
application and the appeal has been decided against
the taxpayer-
In such cases, tax payer may file a fresh
application for revocation and the officer shall
process the application for revocation considering
the extended timelines as provided vide the said
notification.
4. It may be recalled that, with effect from
01-01-2021, proviso to sub-section (1) of Section 30
of the Goa GST Act has been inserted which
provides for extension of time for filing application
for revocation of cancellation of registration by 30
days by Additional Commissioner and by another
30 days by the Commissioner. Doubts have been
raised whether the said notification has extended
the due date in respect of initial period of 30 days
for filing the application (in cases where registration
has been cancelled under clause (b) or clause (c) of
sub-section (2) of Section 29 of Goa GST Act, 2017)
under sub-section (1) of Section 30 of the Goa GST
Act or whether the due date of filing applications
for renovation of registration can be extended
further for the period of 60 days (30+30) by the
Additional Commissioner/Commissioner, as the case
may be, beyond the extended date of 30-09-2021. It
is clarified that:
(i) where the thirty days’ time limit falls between
1st March, 2020 to 31st December, 2020, there is no
provision available to extend the said time period
of 30 days under Section 30 of the Goa GST Act. For
such cases, pursuant to the said notification, the
time limit to apply for revocation of cancellation of
registration stands extended up to 30th September,
2021 only; and
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(ii) where the time period of thirty days since
cancellation of registration has not lapsed as on 1st
January, 2021 or where the registration has been
cancelled on or after 1st January, 2021, the time limit
for applying for revocation of cancellation of regis-
tration shall stand extended as follows:
(a) Where the time period of 90 days (initial 30
days and extension of (30+30 days) since
cancellation of registration has elapsed by
31-08-2021, the time limit to apply for revocation of
cancellation of registration stands extended upto
30th September, 2021, without any further extension
of time by Additional Commissioner/Commissioner.
(b) Where the time period of 60 days (and not
90 days) since cancellation of registration has
elapsed by 31-08-2021, the time limit to apply for
revocation of cancellation of registration stands
extended upto 30th September, 2021, with the
extension of timelines by another 30 days beyond
30-09-2021 by the Commissioner, on being satisfied,
as per proviso to sub-section (1) of Section 30 of the
Goa GST Act.
(c) Where the time period of 30 days (and not
60 days or 90 days) since cancellation of registration
has elapsed by 31-08-2021, the time limit to apply
for revocation of cancellation of registration stands
extended upto 30th September, 2021, with the
extension of timelines by another 30 days beyond
30-09-2021 by the Additional Commissioner and
another 30 days by the Commissioner, on being
satisfied, as per proviso to sub-section (1) of Section
30 of the Goa GST Act.
3. Difficulty, if any, in implementation of this
Circular may be please be brought to the notice of
the undersigned.
Hemant Kumar, IAS, Commissioner State Tax, Goa.
Panaji, 26th October, 2021.
Note: Similar circular is issued under Central Goods
and Services Tax Act, 2017 by the GST Policy wing,
Central Board of Indirect Taxes and Customs, Department
of Revenue, Ministry of Finance, GOI, New Delhi vide
Circular No. 158//14/2021-GST dated 6th September, 2021.
______
No. CCT/26-4/2017-18/E/1874
Circular
(No. 13/2021-22-GST)
Subject: Clarification in respect of certain GST related issues – reg.
Various representations have been received from taxpayers and other stakeholders seeking clarification
in respect of certain issues pertaining to GST laws. The issues have been examined. In order to ensure
uniformity in the implementation of the provisions of the law across field formations, the undersigned, in
exercise of its powers conferred by Section 168 of the Goa Goods and Services Tax Act, 2017 (hereinafter
referred to as “Goa GST Act”), hereby clarifies each of these issues as under:
Sr. No.
Issue
Classification
1
2
3
1. Section 16 (4), as amended with effect from
1. With effect from 01-01-2021, Section 16(4)
01-01-2021, provides that a registered person
of the Goa GST Act, 2017 was amended vide
shall not be entitled to take input tax credit
The Goa Goods and Services Tax (Second
in respect of any invoice or debit note for
Amendment) Act, 2020 (Goa Act 13 of 2020),
supply of goods or services or both after the
so as to delink the date of issuance of debit note
due date of furnishing of the return under
from the date of issuance of the underlying
Section 39 for month of September following
Invoice for purposes of availing input tax credit.
the end of financial year to which such invoice
The amendment made is shown as Below:
or debit note pertains or furnishing of the
“A registered person shall not be entitled
relevant annual return, whichever is earlier.
to take input tax credit in respect of any
Doubts has been raised seeking following
invoice or debit note for supply of goods or
clarification:
services or both after the due date of furnishing
1. which of the following dates are relevant
of the return under Section 39 for the month
to determine the ‘Financial year’ for the
of September following the end of financial
purpose of Section 16(4):
year to which such invoice or invoice relating
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(a) date of issuance of debit note, or
to such debit note pertains or furnishing of the
(b) date of issuance of underlying invoice.
the relevant annual return, whichever is
earlier.”
2. Whether any availment of input tax credit,
As can be seen, the words “invoice relating to
on or after 01-01-2021, in respect of debit notes
such” were omitted w.e.f. 01-01-2021.
issued either prior to or after 01-01-2021, will
be governed by the provisions of the amended
2.
The intent of Law as specified in the Memo-
Section 16 (4), or the amended provision will
randum explaining the Goa Goods
be applicable only in respect of the debit
and Services Tax (Second Amendment) Bill, 2020
notes issued after 01-01-2021?
(Bill No. 19 of 2020) states that “(iii) amend sub-
section (4) of Section 16 of the said Act so as to
delink the date of issuance of debit note from
the date of issuance of the underlying invoice for
purposes of availinginput tax credit.”
3.
Accordingly, it is clarified that:
(a) w.e.f. 01-01-2021, in case of debit notes, the
date of issuance of debit note (not the date
of underlying invoice) shall determine the
relevant financial year for the purpose of
Section 16 (4) of the Goa GST Act.
(b) The availament of ITC on debit notes in
respect of amended provision shall be
applicable from 01-01-2021. Accordingly, for
availment of ITC on or after 01-01-2021 in
respect of debit notes issued either prior to
or after 01-01-2021, the eligibilty for
availment of ITC will be governed by the
amended provision of Section 16(4),
whereas
any
ITC
availed
prior
to
01-01-2021, in respect of debit notes, shall be
governed
under
the
provisions
of
Section 16(4), as it existed before the said
amendment on 01-01-2021.
Illustration 1. A debit note dated 07-07-2021 is
issued in respect of the original invoice dated
16-03-2021. As the invoice pertains to F. Y. 2020-21,
the relevant financial year for availment of ITC in
respect of the said invoice in terms of Section 16(4)
of the Goa GST shall be 2021. However debit note
has been issued in FY 2021-22, the relevant
financial year for availment of ITC in respect of
the said debit note shall be 2021-22 in terms of
amended provision of Section 16(4) of the Goa GST
Act.
Illustration 2. A debit note has been issued on
10-11-2020 in respect an invoice dated 15-07-2019.
relevant financial year for availment of input tax
credit on the said debit note, on or after 01-01-2021,
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will be FY 2020-21 and accordingly, the registered
person can avail ITC on the same till due date of
furnishing of FORM GSTR-3B for the month of
September, 2021 or furnishing of the annual return
for FY 2020-21, whichever is earlier.
2. Whether carrying physical copy of invoice is
1. Rule 138A (1) of the Goa GST Rules, 2017
compulsory during movement of goods in cases
inter-alia, provides that the person in charge of
where suppliers have issued invoices in the
a conveyance shall carry— (a) the invoice or bill
manner prescribed under Rule 48 (4) of the Goa
of supply or delivery challan, as the case may be;
GST Rules, 2017 (i.e. in cases of e-invoice)
and (b) a copy of the e-way bill or the e-way bill
number, either physically or mapped to a Radio
Frequency Identification Device embedded on
to the conveyance in such manner as may be
notified by the Commissioner.
2. Futher, rule 138A (2) of Goa GST Rules, after
being amended vide Notification No. 38/1/2017-
Fin (R & C) (176)/620 dated 14-10-2020, states
that “In case, invoice is issued in the manner
prescribed under sub-rule (4) of Rule 48, the
Quick Reference (QR) code having an embedded
invoice Reference Number (IRN) in it, may be
produced electronically, for verification by the
proper officer in lieu of the physical copy of such
tax invoice”.
3. A conjoint reading of Rules 138A (1) and 138A (2)
of Goa GST Rules, 2017 clearly indicates that
there is no requirement to carry the physical
copy of tax invoice in cases where e-invoice
has been generated by the supplier. After
amendment, the revised Rule 138A (2) states in
unambiguous words that whenever e-invoice has
been generated, the Quick Reference (QR) code,
having an embedded Invoice Reference Number
(IRN) in it, may be produced electronically for
verification by the proper officer in lieu of the
physical copy of such tax invoice.
4. Accordingly, it is clarified that there is no need
to carry the physical copy of tax invoice in cases
where invoice has been generated by the
supplier in the manner prescribed under Rule
48 (4) of the Goa GST Rules and production of
the Quick Response (QR) code having an
embedded Invoice Reference Number (IRN)
electronically, for verification by the proper
officer, would suffice.
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3. Whether the second proviso to Section 54 (3)
1. The term ‘subjected to export duty’ used in
of CGST/SGST Act, prohibiting refund of
second proviso to Section 54 (3) of the Goa GST
unutilized ITC is applicable in case of exports
Act, 2017 means where the goods are actually
of goods which are having NIL rate of export
leviable to export duty and suffering export duty
duty
at the time of export. Therefore, goods in respect
of which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs notification
or which are not covered under Second Schedule
to the Customs Tariff Act, 1975, cannot be
considered to be subjected to any export duty
under Customs Tariff Act, 1975.
2. Accordingly, it is clarified that only those goods
which are actually subjected to export duty i.e.,
on which some export duty has to be paid at the
time of export, will be covered under the
restriction imposed under Section 54 (3) from
availment of refund of accumulated ITC. Goods,
which are not subject to any export duty and in
respect of which either NIL rate is specified in
Second Schedule to the Customs Tariff Act, 1975
or which are fully exempted from payment of
export duty by virtue of any customs notification
or which are not covered under Second Schedule
to the Customs Tariff Act, 1975, would not be
covered by the restriction imposed under the
second proviso to Section 54 (3) of the Goa GST
Act for the purpose of availment of refund of
accumulated ITC.
2. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the
undersigned.
Hemant Kumar, IAS, Commissioner State Tax, Goa.
Panaji, 26th October, 2021.
Note: Similar circular is issued under Central Goods and Services Tax Act, 2017 by the GST Policy wing, Central
Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, GOI, New Delhi vide Circular
No. 160/16/2021-GST dated 20th September, 2021.
———
No. CCT/26-4/2017-18/E/1875
Circular
(No. 14/2021-22-GST)
Subject: Clarification relating to export of services-condition (v) of Section 2 (6) of the IGST Act, 2017-reg.
Various representations have been received citing ambiguity caused in interpretation of the Explanation
1 under Section 8 of the IGST Act, 2017 in relation to condition (v) of export of services as mentioned in sub-
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section (6) of the Section 2 of the IGST Act, 2017.
Doubts have been raised whether the supply of
service by a subsidiary/sister concern/group concern,
etc. of a foreign company in India, which is
incorporated under the laws in India, to the foreign
company incorporated under laws of a country
outside India, will hit by condition (v) of sub-section
(6) of Section 2 of IGST Act.
2. The matter has been examined. In view of the
difficulties being faced by the trade and industry
and to ensure uniformity in the implementation of
the provisions of the law across field formations, the
undersigned, in exercise of its powers conferred by
Section 168 of the Goa Goods and Services Tax Act,
2017 (hereinafter referred to as “Goa GST Act”),
hereby clarifies the issue in succeeding paragraphs.
Relevant legal provisions:
3.1 The export of services has been defined in sub-
section (6) of the Section 2 of the IGST Act, 2017 as
under:
(6) “export of sevices” 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;
3.2 Explanation 1 of the Section 8 of the IGST Act
provides for the conditions wherein establishments
of a person would be treated as establishments of
distinct persons, which is reproduced as under:
Explanation 1.— 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 Union territory; or
(iii) an establishment in a State or Union
territory and any other establishment being a business
vertical registered within that State or Union territory,
then such establishments shall be treated as
establishments of distinct persons.
As per the above Explanation, an establishment
of a person in India and another establishment of the
said person outside India are considered as
establishments of distinct persons.
3.3 Reference is also invited to the Explanation 2
of Section 8 of IGST Act, which is reproduced
below:
“Explanation 2. — A person carrying on a business
through a branch or an agency or a representational
office in any territory shall be treated as having an
establishment in that territory.”
3.4 Reference is also invited to the definition of
“person” as provided under Goa GST Act, 2017, made
applicable to IGST Act vide Section 2(24) of IGST
Act, 2017. “Person” has been defined under
sub-section (84) of the Section 2 of the Goa GST Act,
2017, as under:
(84) “person” includes–
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals,
whether incorporated or not, in India or outside
India;
(g) any corporation established by or under any
Central Act, State Act or Provincial Act or a
Government company as defined in clause (45) of
Section 2 of the Companies Act, 2013;
(h) any body corporate incorporated by or under
the laws of a country outside India;
(i) a Co-operative society registered under any law
relating to co-operative societies;
j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies
Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling
within any of the above;
3.5. The definitions of company and foreign
company have been provided under Section 2 of
Companies Act, 20l3, as under:
(20) “company” means a company incorporated
under this Act or under any previous company law;
(42) “foreign company” means any company or
body corporate incorporated outside lndia which—
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(a) has a place of business in India whether by
itself or through an agent, physically or through
electronic mode; and
(b) conducts any business activity in India in
any other manner.
Analysis of the issue:
4.1 Clause (v) of sub-section (6) of Section 2 of
IGST Act, which defines “export of services”, places
a condition that the services provided by one
establishment of a person to another establishment
of the same person, considered as establishments of
distinct persons as per Explanation 1 of Section 8 of
IGST Act, cannot be treated as export. In otherwords,
any supply of services by an establishment of a
foreign company in India to any other establishment
of the said foreign company outside India will not be
covered under definition of export of services.
4.2 Further, perusal of the Explanation 2 to Section
8 of the IGST Act suggests that if a foreign company
is conducting business in India through a branch or
an agency or a representational office, then the said
branch or agency or representational office of the
foreign company, located in India, shall be treated
as establishment of the said foreign company in
India. Similarly, if any company incorporated in India,
is operating through a branch or an agency or a
representational office in any country outside India,
then that branch or agency or representational office
shall be treated as the establishment of the said
company in the said country.
4.3 In view of the above, it can be stated that
supply of services made by a branch or an agency or
representational office of a foreign company, not
incorporated in India, to any establishment of the
said foreign company outside India, shall be treated
as supply between establishments of distinct persons
and shall not be considered as “export of services”
in view of condition (v) of sub-section (6) of Section 2
of IGST Act. Similarly, any supply of service by a
company incorporated in India to its branch or
agency or representational office, located in any
other country and not incorporated under the laws
of the said country, shall also be considered as supply
between establishments of distinct persons and
cannot be treated as export of services.
4.4 From the perusal of the definition of “person”
under sub-section (84) of Section 2 of the Goa GST
Act, 2017 and the definitions of “company” and
“foreign company” under Section 2 of the Companies
Act, 2013, it is observed that a company incorporated
in India and a foreign company incorporated outside
India, are separate “Person” under the provisions of
Goa GST Act and accordingly, are separate legal
entities. Thus, a subsidiary/sister concern/group
concern of any foreign company which is
incorporated in India, then the said company
incorporated in India will be considered as a separate
“person” under the provisions of Goa GST Act and
accordingly, would be considered as a separate legal
entity than the foreign company.
Clarification:
5.1 In view of the above, it is clarified that a
company incorporated in India and a body
corporate incorporated by or under the laws of a
country outside India, which is also referred to as
foreign company under Companies Act, are
separate persons under Goa GST Act, and thus are
separate legal entities. Accordingly, these two
separate persons would not be considered as
“merely establishments of a distinct person in
accordance with Explanation 1 in Section 8”.
5.2 Therefore, supply of services by a subsidiary/
/sister concern/group concern, etc. of a foreign
company, which is incorporated in India under the
Companies Act, 2013 (and thus qualifies as a
‘company’ in India as per Companies Act), to the
establishments of the said foreign company located
outside India (incorporated outside India), would
not be barred by the condition (v) of the sub-section
(6) of the Section 2 of the IGST Act, 2017 for being
considered as export of services, as it would not be
treated as supply between merely establishments
of distinct persons under Explanation 1 of Section
8 of IGST Act, 2017. Similarly, the supply from a
company incorporated in India to its related
establishments
outside
India,which
are
incorporated under the laws outside India, would
not be treated as supply to merely establishments
of distinct person under Explanation 1 of Section 8
of IGST Act, 2017. Such supplies, therefore, would
qualify as ‘export of services’, subject to fulfilment
of other conditions as provided under sub-section
(6) of Section 2 of IGST Act.
6. Difficulty, if any, in implementation of this
Circular may please be brought to the notice of the
undersigned.
Hemant Kumar, IAS, Commissioner State Tax, Goa.
Panaji, 26th October, 2021.
Note: Similar circular is issued under Central Goods
and Services Tax Act, 2017 by the GST Policy wing,
Central Board of Indirect Taxes and Customs, Department
of Revenue, Ministry of Finance, GOI, New Delhi vide
Circular No. 161/17/2021-GST dated 20th September, 2021.
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No. CCT/26-4/2017-18/E/1877
Circular
(No. 15/2021-22-GST)
Subject: Clarification in respect of refund of tax
specified in Section 77(1) of the Goa GST
Act and Section 19(1) of the IGST Act-reg.
Representations have been received seeking
clarification on the issues in respect of refund of tax
wrongfully paid as specified in Section 77(1) of the
Goa Goods and Services Tax Act, 2017 (hereinafter
referred to as “Goa GST Act”) and Section 19(1) of
the Integrated Goods and Services Tax Act, 2017
(hereinafter referred to as “IGST Act”). In order to
clarify these issues and to ensure uniformity in the
implementation of the provisions of law across the
field formations, the undersigned, in exercise of its
powers conferred by Section 168 of the Goa GST
Act, hereby clarifies the issues detailed hereunder:
2.1 Section 77 of the Goa GST Act, 2017 reads as
follows:
“77. Tax wrongfully collected and paid to Central
Government or State Government.– (1) A ‘registered
person who has paid the Central tax and State tax
or, as the case may be, the Central tax and the Union
territory tax on a transaction considered by him to
be an intra-State supply, but which is subsequently
held to be an inter-State supply, shall be refunded
the amount of taxes so paid in such manner and
subject to such conditions as may be prescribed.
(2) A registered person who has paid integrated
tax on a transaction considered by him to be an
inter-State supply, but which is subsequently held
to be an intra-State supply, shall not be required to
pay any interest on the amount of Central tax and
State tax or, as the case may be, the Central tax and
the Union territory tax payable.”
Section 19 of the IGST Act, 2017 reads as follows:
“19. Tax wrongfully collected and paid to Central
Government or State Government. —(1) A registered
person who has paid integrated tax on a supply
considered by him to be an inter-State supply, but
which is subsequently held to be an intra-State
supply, shall be granted refund of the amount of
integrated tax so paid in such manner and subject
to such conditions as may be prescribed.
(2) A registered person who has paid Central tax
and State tax or Union territory tax, as the case may
be, on a transaction considered by him to be an
intra-State supply, but which is subsequently held
to be an inter- State supply, shall not be required to
pay any interest on the amount of integrated tax
payable.”
3. Interpretation of the term “subsequently held”
3.1 Doubts have been raised regarding the
interpretation of the term “subsequently held” in
the aforementioned sections, and whether refund
claim under the said sections is available only if
supply made by a taxpayer as inter-State or intra-
State, is subsequently held by tax officers as intra-
State and inter-State respectively, either on
scrutiny/assessment/audit/investigation, or as a
result of any adjudication, appellate or any other
proceeding or whether the refund under the said
sections is also available when the inter-State or
intra-State supply made by a taxpayer, is
subsequently found by taxpayer himself as intra-
State and inter-State respectively.
3.2 In this regard, it is clarified that the term
“subsequently held” in Section 77 of Goa GST Act,
2017 or under Section 19 of IGST Act, 2017 covers
both the cases where the inter-State or intra-State
supply made by a taxpayer, is either subsequently
found by taxpayer himself as intra-State or inter-
State respectively or where the inter-State or intra-
State supply made by a taxpayer is subsequently
found/held as intra-State or inter-State respectively
by the tax officer in any proceeding. Accordingly,
refund claim under the said sections can be claimed
by the taxpayer in both the above mentioned
situations, provided the taxpayer pays the required
amount of tax in the correct head.
4. The relevant date for claiming refund under
Section 77 of the Goa GST Act/Section 19 of the
IGST Act, 2017.
4.1 Section 77 of the Goa GST Act and Section
19 of the IGST Act, 2017 provide that in case a
supply earlier considered by a taxpayer as intra-
State or inter-State, is subsequently held as inter-
State or intra-State respectively, the amount of
central and state tax paid or integrated tax paid, as
the case may be, on such supply shall be refunded
in such manner and subject to such conditions as
may be prescribed. In order to prescribe the manner
and conditions for refund under Section 77 of the
Goa GST Act and Section 19 of the IGST Act, sub-
rule (1A) has been inserted after sub-rule (1) of Rule
89 of the Goa Goods and Services Tax Rules, 2017
(hereinafter referred to as “Goa GST Rules”) vide
Notification No. 38/1/2017-Fin(R&C)(217)/1937 dated
06-10-2021. The said sub-rule (1A) of Rule 89 of Goa
GST Rules, 2017 reads as follows:
“(1A) Any person, claiming refund under Section
77 of the Act of any tax paid by him, in respect of
a transaction considered by him to be an intra-State
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supply, which is subsequently held to be an inter-State supply, may, before the expiry of a period of two years
from the date of payment of the tax on the inter-State supply, file an application electronically in FORM GST
RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the
Commissioner:
Provided that the said application may, as regard to any payment of tax on inter-State supply before
coming into force of this sub-rule, be filed before the expiry of a period of two years from the date on which
this sub-rule comes into force.”
4.2 The aforementioned amendment in the Rule 89 of Goa GST Rules, 2017 clarifies that the refund under
Section 77 of Goa GST Act/Section 19 of IGST Act, 2017 can be claimed before the expiry of two years from
the date of payment of tax under the correct head, i.e. integrated tax paid in respect of subsequently held
inter-State supply, or central and state tax in respect of subsequently held intra-State supply, as the case
may be. However, in cases, where the taxpayer has made the payment in the correct head before the date
of issuance of Notification No. 38/1/2017-Fin(R&C)(217)/1937 dated 06-10-2021, the refund application
under Section 77 of the Goa GST Act/Section 19 of the IGST Act can be filed before the expiry of two years
from the date of effectivity the said notification, i.e. from 24-09-2021.
4.3 Application of sub-rule (1A) of Rule 89 read with Section 77 of the Goa GST Act/Section 19 of the
IGST Act is explained through following illustrations.
A tax payer “A” has issued the invoice dated 10-03-2018 charging CGST and SGST on a transaction and
accordingly paid the applicable tax (CGST and SGST) in the return for March, 2018 tax period. The following
Scenarios are explained hereunder:
Sl.
Scenario
Last date for filing the
No.
refund claim
1. Having realized on his own that the said transaction
Since “A” has paid the tax in the correct head
is an inter-State supply, “A” paid IGST in respect of
before issuance of Notification No. 38/1/2017-
the said transaction on 10-05-2021
-Fin (R&C)(217)/1937 dated 06-10-2021, the last
date for filing refund application in FORM GST
RFD-01 would be 23-09-2023 (two years from
effective date of Notification).
2. Having realized on his own that the said transaction
Since “A” has paid the correct tax on
is an inter-State supply, “A” paid IGST in respect of
10-11-2021, in terms of Rule 89 (1A) of the
the said transaction on 10-11-2021 i.e. after issuance Goa GST Rules, the last date for filing refund
of Notification No. 38/1/2017-Fin(R&C)(217)/1937 application in FORM GST RFD-01 would be
dated 06-10-2021
09-11-2023 (two years from the date of payment
of tax under the correct head i.e. integrated
tax).
3. Proper Officer or adjudication authority or Appellate
Since “A” has paid the tax in the correct head
authority of “A” has held the transaction as an inter-
before issuance of Notification No. 38/1/2017-
State supply and accordingly, “A” has paid the IGST
-Fin (R&C)(217)/1937 dated 06-10-2021, the last
in respect of the said transaction on 10-05-2019
date for filing refund application in FORM GST
RFD-01 would be 23-09-2023 (two years from
effective date of Notification).
4. Proper Officer or adjudication authority or Appellate
Since “A” has paid the correct tax on
authority of “A” has held the transaction as an inter- 10-11-2022, in terms of Rule 89 (1A) of the Goa
State supply and accordingly, “A” has paid the IGST
GST Rules, the last date for filing refund
in respect of the said transaction on 10-11-2022, i.e.
application in FORM GST RFD-01 would be
after issuance of Notification No. 38/1/2017-Fin (R&C) 09-11-2024 (two years from the date of payment
(217)/1937 dated 06-10-2021
of tax under the correct head, i.e. integrated
Tax).
The examples above are only indicative one and not an exhaustive list. Rule 89 (1A) of the Goa GST Rules
would be applicable for Section 19 of the IGST Act also, where the taxpayer has initially paid IGST on a
specific transaction which later on is held as intra-State supply and the taxpayer accordingly pays CGST
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and SGST on the said transaction. It is also clarified that any refund applications filed, whether pending
or disposed off, before issuance of Notification No. 38/1/2017-Fin(R&C)(217)/1937 dated 06-10-2021, would
also be dealt in accordance with the provisions of Rule 89 (1A) of the Goa GST Rules, 2017.
4.4 Refund under Section 77 of the Goa GST Act/Section 19 of the IGST Act would not be available where
the taxpayer has made tax adjustment through issuance of credit note under Section 34 of the Goa GST
Act in respect of the said transaction.
5. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the
undersigned.
Hemant Kumar, IAS, Commissioner State Tax, Goa.
Panaji, 26th October, 2021.
Note: Similar circular is issued under Central Goods and Services Tax Act, 2017 by the GST Policy wing, Central
Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, GOI, New Delhi vide Circular
No. 162/18/2021-GST dated 25th September, 2021.
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