This Tax Alert summarizes the final judgment1 of the Division Bench of the Bombay High Court (HC) on the issue of constitutional validity of Section 13(8)(b) and Section 8(2) of the Integrated Goods and Services Tax Act, 2017 (IGST Act).
As per the said
provisions, the place of supply of intermediary services provided to overseas
recipient is the location of supplier. Accordingly, export benefits were denied
to such suppliers.
Initially, writ
petitions were heard by the Division Bench, wherein the first judge struck down
Section 13(8)(b) as ultra vires the IGST Act and the Constitution. However, the
second judge took a dissenting view and upheld the validity of the said
provision. Accordingly, the matter was referred to the third judge.
The third judge held
that the provisions of Section 13(8)(b) and Section 8(2) of the IGST Act are
constitutionally valid, provided that the said provisions are confined in their
operation only to IGST Act2. Consequently, the matter was again
placed before the Division Bench for pronouncement of the final judgment.
While disposing the
matter, the division bench considered the views taken by the second and the third
judge and held the provisions of Section 13(8)(b) and Section 8(2) of the IGST
Act, to be legal, valid and constitutional. Accordingly, the writ petitions
filed by the assessees were dismissed without any costs.
Comments
- The present judgement is in line
with the earlier ruling of the Gujarat HC which had also upheld the
constitutional validity of Section 13(8)(b) and considered the
intermediary services provided to overseas customers as taxable in India
[2020-TIOL-1274-HC-AHM-GST].
- There is no mention in the
final judgment about confining the validity of provisions only to IGST
Act, as held by the third judge while upholding its constitutional
validity. This is likely to remove ambiguity created regarding treatment
of intermediary service as inter-state or intra-state transaction and its
taxability.
No comments:
Post a Comment