Query of the day

Whether hearings before the GST Appellate Tribunal (GSTAT) will be permitted in a hybrid mode? As per 115(7) of Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, all hearings before the Appellate Tribunal may be conducted, either in the physical mode or upon the permission of the President, in the electronic mode. It may be noted that the Rule uses the conjunction “either...or...”, thereby providing for hearing through either physical mode or electronic mode. A strict interpretation of this language does not contemplate a hybrid mode of hearing. However, in practice, hybrid hearings often become a necessity, especially when during an online hearing, the counsel requires assistance from a team member or the taxpayer, necessitating a physical presence in the courtroom. The lawmakers should reconsider this drafting approach and either suitably amend the Rule to explicitly permit hybrid hearings or issue a clarification allowing a liberal interpretation to accommodate them. It will be interesting to observe how this issue evolves.

XYZ Ltd is an 'EOU' registered with 'STPI' and is engaged in exporting information technology software services to entities located overseas. It entered into an Inter-company Service Agreement with its US holding company for export of information technology services on being remunerated. It applies for export refund. Department proposed to reject XYZ Ltd 's application for refund of IGST on ground that it did not satisfy condition of section 2(6)(v) of IGST Act for reason that XYZ Ltd. and its holding company are establishments of a single person and, therefore, services provided by XYZ Ltd. to its holding company did not constitute as export of services within meaning of section 2(6) of IGST Act. Is it the valid view? Services rendered by a subsidiary of a foreign company to its holding are not covered under section 2(6)(v) which says that for being an export of services the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 (inter-alia). Explanation I to Section 8 of the IGST Act, which is reproduced below: "Explanation 1.—For the purposes of this Act, where a person has,— (i)   an establishment in India and any other establishment outside India; (ii)   an establishment in a State or Union territory and any other establishment outside that State or Union territory; or (iii)   an establishment in a State or Union territory and any other establishment registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons." In unambiguous terms, it clarifies that a company incorporated in India and a body corporate incorporated outside India (foreign company) are separate persons under CGST Act, which would not be considered as 'merely establishments of a distinct person in accordance with Explanation I in section 8. Therefore, supply of services by a subsidiary/ sister concern/ group concern, etc. of a foreign company, which is incorporated in India to establishments of said foreign company would not be barred by section 2(6)(v) of IGST Act 2017 for being considered as export of services. Therefore, the refund could not be denied based on this argument.

REG-01 does not ask for such requirement of providing the registered rent agreement. This is not the valid point as no such requirement is mentioned in Rule 7 read with REG-01. Therefore, deficiency stated in REG-03 as per rule 8 is not the valid deficiency.

Applicant should furnish clarification electronically in FORM GST REG-04, within a period of seven working days from the date of the receipt of such notice.

REG-01 does not ask for such requirement of providing the residence proof of partners. This is not the valid point as no such requirement is mentioned in Rule 7 read with REG-01. Therefore, deficiency stated in REG-03 as per rule 8 is not the valid deficiency.

Applicant should furnish clarification electronically in FORM GST REG-04, within a period of seven working days from the date of the receipt of such notice.

Security services (services provided by way of supply of security personnel) provided to a registered person is covered under RCM when the supplier is any person other than a body corporate and recipient is registered person. As per the notification, for the defintion of body corporate, the sec 2(11) of Co. Act is required to be referred. As per sec 2(11) of Co. Act, 2013 read with Circular No. 8/48/2(7)/63-PR, dated 24-11-1962 and Circular No. 8(26)/2(7)/63-PR, dated 13-3-1963, any corporate body, i.e., a body which has been or is incorporated under some statute and which has a perpetual succession, a common seal and is a legal entity apart from the members consisting it, will come within the definition of the term 'body corporate'.

As the LLP satisfies all the conditions of body corporate, therefore it is not the case of RCM.

Where any partner retires from the firm, he or the firm, shall intimate the date of retirement of the said partner to the Commissioner by a notice in that behalf in writing and such partner shall be liable to pay tax, interest or penalty due up to the date of his retirement whether determined or not, on that date. If no such intimation is given within one month from the date of retirement, the said liability of retiring partner shall continue until the date on which such intimation is received by the Commissioner.

In our view, this point will be litigation prone issue in times to come.