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GST is applicable on IT Software related Consulting Services in Oracle ERP: AAR [Read Order]

AAR - GST - Oracle ERP - IT software

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that GST is applicable to IT software related consulting services in Oracle ERP.

The applicant, Rajesh Rama Varma provides IT software related consulting services in the area of Oracle ERP with relation to Oracle Financials to Doyen for a consultancy fee laid down in the consultancy agreement.

As part of the Contract, his role was that of a Consultant to provide support services to the Oracle ERP owned by the US client based out of Boston. The original contract was between the Principal and the US client and a part of the service was contracted to him. As per the terms of the contract, the consultancy fee for his services was decided to be billed on an hourly basis in USD of $33.90 per/hr. The fee was decided to be paid in equivalent INR based on the conversion rate of INR/USD on the average prevailing rate of the last 3 months. The GST taxes would be charged separately while raising the invoice by him on the Principal. The contract is currently in force and valid until December 2021.

The applicant sought advance ruling on the issue of whether the GST is applicable to IT software related consulting services in Oracle ERP.

The Authority consists of members Manasa Gangotri Kata and Thiru Kurinji Selvan V.S ruled that GST is applicable to IT software related consulting services in Oracle ERP as the said activity satisfies the conditions of Section 7(1)(a) and is a supply under GST. As per Para 5 of Schedule II read with Section 7(1A), this supply is a supply of services. Therefore, the applicant is liable to pay GST at appropriate rates on the supply of consultancy services to Doyen.

“In respect of the questions whether such supply of services is ‘export of services’ . ‘zero-rated supply’ and eligibility of refund, this authority’ cannot answer the questions as they are not covered in Section 97(2) of the CGST/TNGST Act,” the AAR ruled.

To Read the full text of the Order CLICK HERE
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