Update
15 Jul 2022
Update
Indirect Tax Monthly Updates
15 Jul 2021
15 Jul 2021
Bombay High Court pronounces split verdict on the constitutional validity of IGST provisions for place of supply relating to intermediary services.
The judges of Bombay High Court, Justice Abhay Ahuja and Justice Ujjal Bhuyan, in the case of Dharmendra M. Jani v. Union of India, 2021 (6) TMI 563 and 2021 (6) TMI 383, while deciding upon the constitutional validity of Section 13(8)(b) and Section 8(2) of the Integrated Goods and Services Tax Act (IGST Act), (which deals with place of supply in case of intermediary services), differed in their opinions and gave a split verdict. The Petitioner in this case was engaged in providing marketing and promotion services to customers located outside India on commission basis, acting as an intermediary.
Justice Bhuyan, while holding Section 13(8)(b) of the IGST Act, (which resulted in the levy of GST on intermediary services provided to a recipient outside India) to be unconstitutional, noted that the provision runs contrary to the scheme of the Central Goods and Services Tax Act, 2017 (CGST Act) as well as the IGST Act, besides being beyond the charging sections of both the Acts. Holding intermediary services provided to recipients outside India as ‘export of services’, he observed that under Article 246A, 269A and 286 of the Constitution of India (Constitution), the Parliament is only empowered to frame laws for the levy and collection of GST in the course of inter-state trade or commerce and that the Constitution does not empower imposition of tax on export of services outside the territory of India by treating the same as local supply.
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