Airbus India put under 18% GST for services supply to French parent

The ruling once highlights deep divide between the industry and revenue department over qualification of intermediary service.

New Delhi: The Indian operations of French aviation giant Airbus involving procurement of raw material from local vendors and facilitating supply abroad are ‘intermediary services’ and hence liable to 18 per cent GST, an authority of advance ruling (AAR) has ruled.

Airbus Group India went to Karnataka bench of AAR seeking clarity on whether the services rendered by it to its holding company in France qualified as export of services and hence treated as zero rates supply not liable to GST.

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Airbus Group India Pvt Ltd is a subsidiary of Airbus Invest SAS, France (Holding Company) and its ultimate holding company is Airbus SE, Netherlands. Globally Airbus Group is an international pioneer in aerospace industry and is a leader in designing, assembling and delivering aerospace products, services and solutions to its customers on a global scale.

The AAR ruled Airbus India operations as that of an intermediary citing that it cannot be treated as an agent or broker that undertake supplies on behalf of their clients. In case of Airbus, the Indian subsidiary was acting as an intermediary for making supplies to parent entity not on its own account.

“The services rendered by the applicant do not qualify as export of services and consequently are exigible to GST at the rate of 18 per cent,” the AAR said.

The ruling once highlights deep divide between the industry and revenue department over qualification of intermediary service.

Rajat Mohan, senior partner, AMRG & Associate said that Levying of GST by tax authorities on marketing services, back-end office assistance, customer relations, accounting, administration, liaison operations, and managing various documentation requirements offered to clients situated outside India has remained inconsistent in the country creating confusion over the applicability of GST.