Circular No.ES/157/2021-22 24th September, 2021
To: Members of the Council
Sub: Clarification relating to export of services-condition (v) of section 2(6) of the IGST Act 2017
CBIC has issued Circular No. 161/17/2021-GST dated 20th September, 2021 clarifying relating to export of services-condition (v) of section 2(6) of the IGST Act 2017.
Various representations have been received by CBIC from members of Trade citing ambiguity caused in interpretation of the Explanation 1 under section 8 of the IGST Act 2017 in relation to condition (v) of export of services as mentioned in sub-section (6) of the section 2 of the IGST Act 2017. Doubts have been raised whether the supply of service by a subsidiary/ sister concern/ group concern, etc. of a foreign company in India, which is incorporated under the laws in India, to the foreign company incorporated under laws of a country outside India, will hit by condition (v) of subsection (6) of section 2 of IGST Act.
Now, the CBIC has examined the issues and provided clarification in this regard.
This circular clarifies that a company incorporated in India and a body corporate incorporated under foreign laws are separate persons and thus are separate legal entities. Accordingly, these two separate persons would not be considered as “merely establishments of a distinct person”.
For detailed information, members may kindly refer to Circular No. 161/17/2021-GST dated 20th September, 2021