2026-VIL-110-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Import of services, Applicability of GST under reverse charge mechanism on Commission paid to foreign national Director for marketing and sourcing of orders – Applicant pays commission at 15% of invoice value to its Director who is a foreign national located outside India for marketing and sourcing of orders. The Director owns 99% shares of the company and is not paid any separate salary - Whether GST is payable on commission paid to a foreign national director for providing marketing and sourcing services – HELD - The supplier of service, being the Director, is located outside India and the recipient, being the applicant company, is located in India, satisfying the conditions under Section 2(11) of the IGST Act, 2017 for import of services. The place of supply of services is India as per Section 13(2) of the IGST Act, 2017, being the location of the recipient. As the supplier is located in a non-taxable territory and the recipient is located in a taxable territory, the conditions laid down in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are fulfilled, making the services supplied attract GST under RCM - The applicant is liable to pay GST under reverse charge on commission paid to the foreign national Director – Ordered accordingly - Commission paid to foreign marketing agents for sourcing orders, Intermediary services – Place of supply – Applicant pays commission at 20% of invoice value to foreign marketing agents who facilitate sourcing of orders. These agents are not employees or directors of the applicant and invoices are raised in the name of the buyer only - Whether GST is payable on commission paid to foreign marketing agents for facilitating supply of goods - HELD - GST is not payable on commission paid to foreign marketing agents as they constitute intermediaries as defined under Section 2(13) of the IGST Act, 2017. While the supplier is located outside India and the recipient is located in India, the third condition for import of services is not satisfied. For intermediary services, Section 13(8) of the IGST Act, 2017 stipulates that the place of supply shall be the location of the supplier of services, not India. Therefore, the services do not fall within the definition of "import of services" under Section 2(11) of the IGST Act, 2017, and consequently do not attract RCM - GST is not payable on commission paid to foreign marketing agents - Charges paid to foreign clearing and forwarding agents for logistics services – Applicability of GST under reverse charge mechanism – The Applicant utilizes clearing and forwarding agents in foreign countries for further shipment of goods in instances of multiple consignors in a single export shipment. The foreign agents charge for various services including arrival charges, customs clearance charges, and terminal handling charges - Whether GST is payable on charges paid to foreign clearing and forwarding agents for logistics services performed outside India – HELD - The clearing and forwarding agents supply logistics services on their own account in non-taxable territory, constituting import of services as per Section 2(11) of the IGST Act, 2017. The supplier is located outside India, the recipient is located in India, and the place of supply is India as per Section 13(2) of the IGST Act, 2017. The conditions specified in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are satisfied, making these services liable to tax under RCM - The applicant is liable to pay GST under reverse charge on charges paid to foreign clearing and forwarding agents.
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