Distinct persons under gst -query

This query is : Resolved

Tarun Kumar (Querist)
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18 January 2019 Dear Sir,

We have one co. in India with 2 directors and we are providing services to a co. outside india ( foreign co. have one same director as that in Indian co.) .

We are raising invoice for foreign co. and receiving money in foreign currency, we have showed our invoices as export of services in GST portal for FY 2017-18. We have some accumulated ITC for FY 17-18 for that we have applied for GST Refund.

Department persons are telling that it is distinct persons and we cannot show the services provided as exports and pay the GST.

Please help on this sir?

CA Anita Bhadra

CA Anita Bhadra (Expert)
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18 January 2019 In my view : your company in India and foreign company outside will be considered as related party and not distinct person
As for distinct person an establishment should be a legal entity having same PAN ( that is not applicable in your case )
However ,in GST Act the world distinct person / related party are being used commonly .

Relevant definitions and provisions are as indicated below :-

Explanation to Section 15 of CGST Act provides,-
(a) persons shall be deemed to be “related persons” if –
(i) such persons are officers or directors of one another’s businesses;
the test should establish that 2 companies are connected if they had common officers/directors.

Section 2(6) (e) of IGST Act states :- Exports of service means supply of services when the supplier of service and recipient of service are not merely establishments of a distinct person in accordance with explanation 1 of section 8 of IGST Act .
As per Explanation1 to section 8(1)(i) of IGST Act - an establishment in India and any other establishment outside India, shall be treated as establishments of distinct persons.
That means branches/offices/establishments/ Verticals of a single entity (bearing same PAN number) in same/ different states having separate registration for purpose of GST laws shall be considered distinct entities.

Distinct persons are persons with different GSTINs belonging to ONE LEGAL ENTITY (SINGLE PAN ) situated within the same state or in two different states or in a different country.

Udaya Chandran

Udaya Chandran (Expert)
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19 January 2019 According to section 2(6) of IGST Act, services are qualified as exported only if the following conditions are satisfied:
(i) the supplier of service is located in India; - Satisfied
(ii) the recipient of service is located outside India; - Satisfied
(iii) the place of supply of service is outside India; - No information - the place of supply to be determined
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and - Satisfied
(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; - Yes, I agree with Ms.Anita, they are not distinct person - Satisfied

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