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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

A Mumbai firm paid a Japanese vendor for a service, and the invoice for the service was received before the appointed day, but the service was imported after that day. No tax was paid under the existing law. Under section 21 of the IGST Act, 2017, the import is:

The import is liable to tax under the IGST Act. Section 21 makes import of services made on or after the appointed day taxable even if the transaction was initiated earlier, and relief applies only to tax already paid under the existing law, which is nil here.

  1. ALiable to tax under the IGST Act regardless of the transaction having been initiated before the appointed dayCorrect
  2. BExempt, because the invoice was received before the appointed day
  3. CTaxable only for the portion of the value paid after the appointed day
  4. DTaxable under CGST and SGST rather than IGST

Explanation

Section 21 says import of services made on or after the appointed day is liable to tax regardless of whether the transaction was initiated earlier. Relief arises only when tax was paid in full or part under the existing law. Here no tax was paid, so the full tax is payable.

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