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CS Executive · Tax Laws and Practice · Levy and Collection of GST

A foreign ECO has no physical presence and no representative in the taxable territory, yet services notified under section 9(5) of the CGST Act, 2017 are supplied through it. Which course follows from the second proviso?

The ECO must appoint a person in the taxable territory to pay the tax, and that appointed person is liable. The second proviso to section 9(5) applies where the ECO has neither physical presence nor a representative there; liability does not lapse or shift to the recipient.

  1. AThe recipient of each service becomes liable to pay the tax on reverse charge
  2. BLiability lapses because the ECO is outside the taxable territory
  3. CThe ECO must appoint a person in the taxable territory for paying tax, and that person is liable to pay the taxCorrect
  4. DThe Central Government must appoint a representative who then pays the tax

Explanation

The second proviso covers an ECO with neither physical presence nor a representative in the taxable territory. Such an ECO shall appoint a person in the taxable territory for the purpose of paying tax, and that person is liable. The ECO itself must make the appointment, not the Government, and reverse charge on the recipient is not what the proviso provides.

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