The Bombay High Court upheld the constitutionality of Sections 8(2) and 13(8)(b) of the IGST Act
Fact and issue of the case
The petitioner worked as a marketing and advertising consultant for clients outside of India. It was solely offering its services to the principle outside of India, and in exchange, it was getting payment from that principal in convertible foreign currency. The petitioner said that the deal it would make with the international clients would be an export of services from India, earning the nation important convertible foreign cash through a middleman. However, because Section 13(8)(b) of the IGST Act classifies fiction,The location of the services provider, which is in India, shall be the place of supply, and CGST and SGST would be levied. It submitted a writ petition challenging the constitutionality of the IGST Act’s provision 13(8)(b).
Two judges made up the division bench of the Bombay High Court. Section 13(8)(b) of the IGST Act, according to one judge of the Bombay High Court Division Bench, not only violates the general intent of the CGST Act and the IGST Act, but also violates Articles 245, 246A, 269A, and 286(1)(b) of the Constitution. As a result, while one person believes the clause to be unlawful, another person disagrees and has stated a different opinion. As a result of this disagreement, the subject was brought to the Hon’ble Chief Justice.
The High Court Ruled
The Honourable Bombay High Court declared that Section 13(8)(b) and Section 8(2) of the IGST Act are lawful, legitimate, and constitutional after observing that the fiction produced by Section 13(8)(b) would need to be limited solely to the requirements of IGST. But the court has also ruled that these clauses are exclusively applicable to the IGST Act and cannot be utilised to tax intermediate services under the CGST and SGST Acts.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
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