Foreign companies use GST gaps, cause loss: PIL – Times of India

NEW DELHI: The Supreme Court on Wednesday sought responses of the finance ministry, the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) on a PIL seeking a mechanism to levy GST on foreign companies, like Facebook and Google, in business-to-business transactions for Online Information Database Access and Retrieval (OIDAR) services.
Petitioner Pradeep Goyal, through senior advocate Sonia Mathur, told the SC that the government had no mechanism to track total GST paid on OIDAR services used by Indian recipients, which do not qualify to be Non-Taxable Online Recipients (NTORs), under reverse charge basis.

“The nature of OIDAR services are such that they can be provided online from a remote location outside the table territory. The overseas suppliers of such services would have an unfair tax advantage should the services provided by them be left out of the tax net,” Mathur said.
A bench of Chief Justice S A Bobde and Justices A S Bopanna and V Ramasubramanian termed the PIL, which the petitioner claimed to be non-adversarial or for any personal gain, to be a good one, needing adjudication by the apex court. The PIL, filed through advocate Charu Mathur, said the government was losing millions of dollars as goods and services tax as it did not have any mechanism to plug the gaps exploited by foreign entities.
“Figures of revenue generated out of services provided to non-NTORs are not reported anywhere in GST returns. As most overseas service providers maintain their accounts in foreign jurisdictions and are audited as per local laws of the country in which they are located, the Indian government has no mechanism to verify the total receipts earned by these service providers from India and check GST compliances,” the petitioner said.