Goods and Service Tax is Levy in accordance with the concept of supply.
As per the CGST Act’ 2017- section 7(1) (b), supply includes “import of services” for a consideration whether or not in the course or furtherance of business.
As per the IGST Act’2017- section 7 (4), if Supply of services imported into the territory of India will be counted to be a supply of services in the course of inter-State trade or inter-State commerce.
As per the Integrated Goods and Services Tax Act’2017- section 5 (3),The Government may, on the recommendations of the GST Council, by notification, specify categories of supply of services or goods or both, the tax on which will be paid on reverse charge mechanism basis by the recipient of such goods or services or both and all the provisions of this Act will apply to such recipient as an individual who is liable for tax paying in relation to the supply of such goods or services or both.
Recommendation of Government on IGST Act’ 2017- Section 5 (3) – Notification No. 10/ 2017
S. No . | Category of Supply of Services | Supplier of service | Recipient of Service |
| 1 | Any service supplied by any individual who is located in a non-taxable territory to any person other than non-taxable online recipient. | Any person located in a territory which is non-taxable | Any person located in the territory which is taxable other than non-taxable online recipient. |
Note: Non-taxable online recipient’ means a local authority, government authority, an individual or any person who is not registered under Goods and Service Tax and receiving online information & database access or retrieval services related with any purpose except commerce, industry or any other business or profession.
Conclusion:
Thus, As per the above section and notification as person or company would be counted as recipient of service and liable to pay tax on reverse charge basis as service provider are situated in non-taxable territory.
Note: There is also provision in GST Act that if a person is liable to pay GST on reverse charge basis then he/she is liable to get compulsory registration under GST Act.