Ques. If a foreign company is having a sub-contract with an Indian LLP which requires personnel of foreign company to stay in India for a year, so who will be liable to GST? Foreign company under forward charge or Indian LLP under reverse charge? Payment has to be made in foreign currency outside India and all the effective management and control is also outside India?
Ans. Unless the foreign company has come and offered services in India it cannot be categorised as a non resident taxable person. The term non resident taxable person has been defined in Section 2(77) of the CGST Act to mean any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. Accordingly, only the person who undertakes transaction in India but who does not have a fixed place of business in India shall fall within the ambit of this definition. However if the employees of the foreign company have been deputed in India under an agreement entered into by the foreign company with the Indian counterpart whereby such personnel were required to be deputed then it cannot be said that the foreign company has undertaken the supply in India. This supply has been undertaken from outside India but performed in India. Thus, the Indian company would be required to pay GST under reverse charge as such services would qualify as import of service.
