Supply of Intermediary Export Services Taxable under Forward Charge Mechanism and not IGST under RCM: AAR [Read Order]

The Authority of Advance Ruling (AAR) in Karnataka ruled that the supply of intermediary export services are taxable under forward charge mechanism and not under Integrated Goods and Service Tax (IGST) under Reverse Charge Mechanism (RCM).

In an application filed by the applicant, the Authority of Advance Ruling (AAR) affirmed that the export service by the applicant does not attract Integrated Goods and Service Tax (IGST) under Reverse Charge Mechanism (RCM) as the applicant is the supplier and not the recipient of the import of services. It is taxable under the forward charge mechanism.

The applicant, M/s Aluminium Machines Pvt. Ltd. is a private limited company, registered under the provisions of the Goods and Service Act, 2017. The applicant is engaged in the import of machines from the parent company in Italy and markets the machines in the domestic area and has only 1 office in India at Bangalore, where it is indulged in sales, service and administration.

However, the applicant neither furnished any relevant facts pertaining to the questions raised in the application nor interpretation of law.

The applicant sought the advance ruling on the issue of whether the export of services by the applicant attracts Integrated Goods and Service Tax (IGST) under Reverse Charge Mechanism (RCM) or not?

The Authority of Advance Ruling (AAR) consisting of the members Dr. Ravi Prasad and Mashhood ur Rehman Farooqui ruled that the export services by the applicant do not attract Integrated Goods and Service Tax (IGST) under Reverse Charge Mechanism (RCM) as the applicant is the supplier and not the recipient of the import of services. The service being provided by the applicant is covered under intermediary services, so the applicant is liable to pay tax under the forward charge mechanism.