Bombay HC issues a split verdict on the validity of section 13 (8) (b) of the IGST Act | India News

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MUMBAI: The Bombay High Court issued a split verdict on Wednesday challenging the constitutional validity of section 13 (8) (b) of Integrated goods and services tax (IGST) Law that imposes a responsibility on the service provided by intermediaries to people located abroad.
Justice Ujjal Bhuyan declared the section unconstitutional. Judge Abhay Ahuja, who was on the division bench who heard the challenge in a 2018 petition filed by Dharmendra. Jani, dissented. Its dissenting verdict will be delivered on June 16.
Judge Bhuyan said that “what we note is that section 13 (8) (b) of the IGST Act, read with section 8 (2) of the Act, has created a fiction that considers that the export of the service by of an intermediary is a local supply, that is, an interstate supply. This is definitely an artificial device created to overcome a constitutional embargo. The question to consider is whether the creation of such a consideration provision is permissible or should it be approved by a constitutional court ”
And he said that “he does not hesitate to maintain that section 13 (8) (b) of the IGST Act of 2017 is ultra vires the Act as well as unconstitutional.” The judge said: “By artificially creating a consideration provision in the form of section 13 (8) (b) of the IGST Act, where the location of the recipient of the service provided by an intermediary is outside India, the place of supply has been treated as the location of the supplier, ie in India. CGST It performs as well as the IGST Act as well as being beyond the collection sections of both laws. ”
But Judge Ahuja said he disagrees, for reasons that will be announced next week.
Jani’s case was that he is a Mumbai-based proprietary company that provides marketing and promotional services to clients outside of India. He requests purchase orders for his foreign clients and promotion of products sold by his foreign clients in India. Section 13 deals with situations where the location of the supplier or recipient is outside India and Section 13 (8) says that the place of supply of the service will be the location of the supplier, which is the intermediary service as per sub-clause ( b). Section 8 (2) of the IGST Act says that in case of supply of services where the location of the supplier and the place of supply of the service are in the same state, it would be treated as intrastate supply. Therefore, the petitioner’s export service as an intermediary would be treated as an interstate supply, which would make said transaction subject to the payment of the central goods and services tax (CGST) and the state goods and services tax (SGST), who paid in protest and attacked validity also on the basis of the right to equality.


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