Page 35 - GSTL_16th July 2020_Vol. 38_Part 3
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               IT Consulting services provided to foreign clients liable to
                    GST : AAR
                       Firms providing  information technology software related services to
               overseas client of an Indian business would be liable to pay 18 per cent GST, the
               Authority for Advance Ruling (AAR) has said.
                       A firm engaged in the business of providing software related consultan-
               cy services in Oracle ERP approached the Tamil Nadu Bench of the AAR seeking
               ruling on whether the services provided by it to foreign client of  a GST-
               registered IT company, Doyen Systems, shall be treated as export of services.
                       In the said case, the original contract was between Doyen Systems and
               the US client, and a part of the service was contracted to the applicant firm, who
               would be paid consultancy fee for his services.
                       The applicant had entered into agreement with Doyen Systems.
                       The foreign client was to pay consideration to Indian IT company and as
               per independently agreed upon contract value, which had no rele-
               vance/reference to contract between Doyen Systems and the applicant.
                       Applicant was of the view that he directly rendered the service to foreign
               client and was paid consideration by Doyen Systems on behalf of foreign com-
               pany.
                       The AAR while passing its ruling said there are two sets of contract - one
               between applicant and Doyen Systems for providing professional and consultan-
               cy services, and second between Doyen Systems and its foreign client for provid-
               ing software support services.
                       The applicant is not party to the second contract.
                       AAR observed that  applicant’s contention of being  an  agent to  Doyen
               Systems cannot be substantiated merely because the applicant is in e-mail corre-
               spondence with the employees of foreign clients of the Indian company.
                       It doesn’t mean that he is ‘carrying on the business of supply of services’
               on behalf of company as required under definition of agent.
                       The AAR said that the applicant provides services as a ‘Consultant’ en-
               gaged by Doyen Systems.

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