The supply of the intermediary service is in the taxable territory
Q. We import steel and supply to our customers in India. Sometimes, the customer wants to buy directly from our international supplier in US dollars. In such trade practice, we take some sales commissions from the international supplier and quote prices to the end customer. Our question is whether we will have to pay GST under reverse charge mechanism for the commission received from the international supplier in our bank account after completion of shipment. If yes, please give us the relevant provisions in law.
The service you provide is that of an intermediary. As per 2(13) of the IGST Act, 2017, “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both, or securities on his own account.
As per Section 13 (8) (b) of the same Act, the place of supply of “intermediary services” shall be the location of the supplier of services. Therefore, the supply of the intermediary service is in the taxable territory and so the service is taxable and as a service provider, you have to discharge the tax liability.
Q. Is it obligatory for a bank to advise and obtain prior agreement ofexporter/importer customers about the charges to be levied on export/import transactions? What is the provision for imposing penal charges? Is it open to the bank to levy any charges and debit the account of the customer?
Before entrusting any business to the bank you have every right to demand in writing the details of the charges that the bank will levy for handling the transaction, including the penal charges. Once the bank gives you the details and you agree to that, you can give the business to that bank. If you find the charges uncompetitive, you can either negotiate or go to any other bank whose charges are acceptable to you. Once you agree to the charges and give any business to the bank, you and the bank are bound to put up with the charges, as agreed. All banks do not have the same schedule of charges. Nor do they have the same standard of service.
Q. Our export product is eligible for MEIS benefit. By mistake our Customs House Agent has ticked ‘N’ in the reward item box in the shipping bill instead of ‘Y’. Now, the shipping bill is not transmitted by the Customs to the DGFT server. So, we are unable to claim the MEIS benefit. Is there any remedy for this?
You may seek an amendment to the shipping bill in accordance with Section 149 of the Customs Act, 1962. If they refuse to do so, you may appeal on the basis of the judgments in the case of Saurabh Overseas Traders 2017 (356) E.L.T. 463 (Tri.- Bang.) and Suminter India Organics Pvt. Ltd [2016 (343) E.L.T. 599 (Tri.-Mumbai)].