The Government of Uttar Pradesh on July 05, 2024, issued a notification related to the Clarification on the valuation of supply of import of services by a related person where the recipient is eligible for a full input tax credit.
As per S.No.4 of Schedule I of the Uttar Pradesh Goods and Services Tax Act, 2017, the import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business, is to be treated as supply even if made without consideration.
The following has been stated-
•As per second proviso to rule 28 (1) of UPGST Rules, in cases involving the supply of goods or services or both between the distinct or related persons where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the said goods or services.
•In case of import of services by a registered person in India from a related person located outside India, the tax is required to be paid by the registered person in India under the reverse charge mechanism. In such cases, the registered person in India is required to issue a self-invoice under Section 31(3)(f) of the UPGST Act and pay tax on a reverse charge basis.
•In cases where full 3 input tax credit is available to the recipient if the invoice is not issued by the related domestic entity with respect to any service provided by the foreign affiliate to it, the value of such services may be deemed to be declared as Nil and may be deemed as open market value in terms of second proviso to rule 28(1) of UPGST Rules.
[Circular No. GST/2024-25/79/State Tax]
