A Division Bench of Bombay High Court gave a split verdict in a challenge with respect to the Constitutionality of Section 13(8)(b) of the Integrated Goods and Services Tax (IGST) Act.
Justice Ujjal Bhuyan held the same section ultra vires and struck down the provision as unconstitutional.
On other hand Justice Abhay Ahuja differed from it and will give his opinion on June 16.
The petitioner claimed that for intermediary services where the location of the recipient is outside India, the place of supply shall be the location of the supplier of services which is in India, thus bringing into the tax net what is basically export of services.
These services would be treated as intra-state supply of services under section 13(8)(b) read with section 8(2) of the IGST Act rendering such transaction liable to payment of Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).
Thus petioner challenged the maintainability of the above mentioned provisions on various grounds.
Justice Bhuyan observed that while section 8(2) of the IGST Act defines intra-state supply, by artificially creating a deeming provision in the form of section 13(8)(b), where the location of the recipient of service provided by an intermediary is outside India, the place of supply has been treated as the location of the supplier i.e.,
in India.
Therefore the Justice Bhuyan held held that aforementioned runs contrary to the scheme of the CGST Act as well as the IGST Act.
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