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Urgent and Important: Online advertising services on Internet Availed by registered entity

Tejas shah (Sweeper) (163 Points)

30 June 2021

Hi,

Our company who is registered under GST, had availed online advertising services over the internet on various popular social media websites for promotion of their products between Jul 17 to Mar 19.

One of the supplier of the services had it's registered office in place outside India and used to draw invoice on us in foreign currency, with that registered office address which was located outside India.

Is My company required to pay any GST ???

At what rate GST has to be paid and under what GST provision it has to be paid ?

What if, we have not made payment till date ? What are it's consequences and remedies ??

Please revert it's urgent and important...

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12 Replies

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 30 June 2021

Kindly clarify the promotion is done in India or overseas

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Tejas shah (Sweeper) (163 Points)
Replied 30 June 2021

In India for promotion of their products

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 01 July 2021

As per Section 2(11) of IGST Act , supply of services treated as import of services when the Supplier of Services is located outside India ,the Recepient of services is located in India & services are being provided in India .
In term of Notification 10/2017 IGST , the Recepient is liable do RCM .
Hence you are required to pay GST on RCM @ 18% .

Need to pay interest @ 18 pa.

Tejas shah (Sweeper) (163 Points)
Replied 01 July 2021

@ Pankaj Rawat, there are no remedies wherein we can defend our case ?

Guru Karthick (45 Points)
Replied 01 July 2021

No, sorry you need to pay.

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 02 July 2021

No there is no way to escape.

Tejas shah (Sweeper) (163 Points)
Replied 07 July 2021

My one important question here is to Pankaj Rawat / Guru Karthick ..

I Have received invoice from Foreign entity in INR format, my payment has gone directly via Credit Card in INR currency and it reflects under domestic transactions under my CC statement, what does it mean and does it change my situation in relation to RCM ???

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 07 July 2021

No dear

To qualify as import of services , you are india & services being reced. in india & supplier of services is outside india . so its nothing do with payment.

RCM is required.

Tejas shah (Sweeper) (163 Points)
Replied 07 July 2021

I am in agreement with you sir, but one of our consultants opined that, Payment is going via CC in Indian Rupees and that entity has it's subsidiary in India so he assumes payment goes to that subsidiary so they should have paid GST and all.. whereas, the circumstances of case is as you pointed out Place of Supply of Service In India, recipient of service registered entity India and Invoice generated and received from Foreign entity on their registered address of that country. So it can be construed as RCM

CA Altamush Zafar (GST Consultant) (15966 Points)
Replied 07 July 2021

Prima Facie it seems that RCM is applicable and you will have to pay it along with interest since payment in INR is not a condition that it will save it from import.

Check from the invoice whether it is being paid to party outside India or if the services are being provided by party outside India. If yes then pay RCM.

Having an Indian subsidiary doesn't impact the transaction unless it is the subsidiary who is providing the service and receiving the payment.

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Tejas shah (Sweeper) (163 Points)
Replied 07 July 2021

@ CA ALTAMUSH ZAFAR, i get your point.. if its their Indian subsidiary would have been providing services than they should raised the GST invoice na ?? And how can we prove they have provided service ? as billing is done by foreign entity..