Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 is ultra vires besides being unconstitutional. However, second judge was of different opinion, who shall pronounce his opinion on 16.06.2021.
Second judge opined that Section 13(8)(b) as well as Section 8(2) of the IGST Act are constitutionally valid and operative for all purposes.
Section 13(8) of the IGST Act, 2017 – Location of the supplier or recipient outside India –-- The petitioner is engaged in providing marketing and promotion services to customers located outside India and registered as a supplier under the provisions of the Act. The petitioner sought a declaration that section 13(8)(b) and section 8(2) of the IGST Act are ultra vires to the Constitution of India and also ultra vires the provisions of the CGST Act. The petitioner submitted that his overseas customers may or may not have establishments in India. However, he provides services only to the principal located outside India and in lieu thereof receives consideration in convertible foreign currency. It is an “export of service” within the meaning of section 2(6) of the IGST Act. Petitioner is also an “intermediary” within the meaning of section 2(13) of the IGST Act. So it is an export of service by an intermediary. As per 13(8), the place of supply of the services mentioned therein shall be the location of the supplier of services which is intermediary services in terms of clause (b). Thus bringing into the tax net what is basically export of services. The respondent submitted that the petitioner is satisfying all the five conditions mentioned in section 2(6) of the IGST Act for export of services. The court observed that it is a supply of service from India to outside India by an intermediary. Petitioner fulfills the requirement of an intermediary as defined in section 2(13) of the IGST Act. Further, all the conditions stipulated in section 2 (6) for a supply of service to be construed as export of service are complied with and it is an ‘export of service’.
Held that:- The Hon’ble High Court hold that section 13(8)(b) of the IGST Act, 2017 is ultra vires the said Act besides being unconstitutional.
Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 is ultra vires besides being unconstitutional. However, second judge was of different opinion, who shall pronounce his opinion on 16.06.2021.
Second judge opined that Section 13(8)(b) as well as Section 8(2) of the IGST Act are constitutionally valid and operative for all purposes.
Section 13(8) of the IGST Act, 2017 – Location of the supplier or recipient outside India –-- The petitioner is engaged in providing marketing and promotion services to customers located outside India and registered as a supplier under the provisions of the Act. The petitioner sought a declaration that section 13(8)(b) and section 8(2) of the IGST Act are ultra vires to the Constitution of India and also ultra vires the provisions of the CGST Act. The petitioner submitted that his overseas customers may or may not have establishments in India. However, he provides services only to the principal located outside India and in lieu thereof receives consideration in convertible foreign currency. It is an “export of service” within the meaning of section 2(6) of the IGST Act. Petitioner is also an “intermediary” within the meaning of section 2(13) of the IGST Act. So it is an export of service by an intermediary. As per 13(8), the place of supply of the services mentioned therein shall be the location of the supplier of services which is intermediary services in terms of clause (b). Thus bringing into the tax net what is basically export of services. The respondent submitted that the petitioner is satisfying all the five conditions mentioned in section 2(6) of the IGST Act for export of services. The court observed that it is a supply of service from India to outside India by an intermediary. Petitioner fulfills the requirement of an intermediary as defined in section 2(13) of the IGST Act. Further, all the conditions stipulated in section 2 (6) for a supply of service to be construed as export of service are complied with and it is an ‘export of service’.
Held that:- The Hon’ble High Court hold that section 13(8)(b) of the IGST Act, 2017 is ultra vires the said Act besides being unconstitutional.