Supreme Court issues Notice to Centre on Plea Seeking GST Payment Tracking Mechanism By Facebook, Amazon, Google, Twitter & Ors.

Supreme Court issues Notice to Centre on Plea Seeking GST Payment Tracking Mechanism By Facebook, Amazon, Google, Twitter & Ors.

The Supreme Court (SC) bench of three judges comprising of Chief Justice S.A. Bobde, Justices A.S. Bopanna, and V. Ramasubramanian has issued notice to the Centre on a plea which also seeks to amend GSTR-5A or introduce a new form to reflect in the Goods & Services Tax (GST) return figures of revenue generated out of services to Non-Taxable Online Recipient (NTOR).

The factual background of the case is that a Public Interest Litigation (PIL) was filed by Mr. Pradeep Goyal (Petitioner)contending that the Government has no mechanism to track total GST paid on the Online Information and Database Access or Retrieval (OIDAR) services used by NTOR Indian recipients under a reverse charge basis.

He further stated that figures of revenue generated out of services provided to Non-NTORs are not reported anywhere in GST returns. As most of the overseas service providers maintain their accounts in the foreign jurisdictions and are audited as per the local laws of the country in which they are situated, the Indian Government has no mechanism to verify the total receipts earned by these service providers from India and check GST compliance.

The petitioner mentioned in the plea that foreign OIDAR service providers that include Facebook Inc, Twitter Inc, Google, etc. are earning huge revenues from Indian customers. But the administration of the provisions of the Act is a cause of concern.

An example was cited to explain the concern- Amazon Web Services, Inc is established in the United States and has a large consumer base in India. IGST is payable on sales to non-business consumers in India. Accordingly, the company requires users of its services for business purposes and who are GST registered to provide the business's GSTIN and address to which the Goods and Services Taxpayer Identification Number (GSTIN) is registered.

This ensures that Integrated Goods and Services Tax (IGST) is not charged from such businesses on their purchase from Amazon web services Inc. In all other cases, IGST is charged for making purchases on the Amazon Web Service Marketplace.

He pleaded to the Court to issue directions to overseas service providers to have a fixed establishment in India or allow the Indian authorities to have no control or access to their accounting records in order to verify their compliance under GST laws.

A further direction was sought in the PIL from the Top Court to have a strong mechanism for overseas OIDAR like it has for others by which there are strong tax collection, compliance, and reporting mechanism through various types of periodical returns, GST audit from independent auditors, and also other machinery provisions.

The petitioner pleaded to the Court to direct the GST authorities to provide data as to how many persons located in a non-taxable territory are providing OIDAR services in India.