Tracking of GST Paid on OIDAR Services: Supreme Court tells GST Council to Decide, directs Petitioner to File Representation [Read Judgement]

The Supreme Court has declined to create a system for tracking services that foreign companies supply in India under the GST regime, dismissing a public interest petition on the issue.

A bench led by Justices B.V. Nagarathna and K.V. Viswanathan heard Advocate Charu Mathur, who argued that platforms like Facebook or OpenAI deliver services here without any way for Indian authorities to monitor or tax them, resulting in a substantial revenue shortfall. Rather than entertain the petition, the Court suggested treating it as a formal representation to the GST Council.

In its order, the Court granted the petitioner permission to forward the entire writ petition to the GST Council and requested that the Council consider it swiftly and in accordance with law. By doing so, the justices effectively removed the judiciary from direct involvement, placing the matter squarely in the Council’s hands.

The petition had pointed out multiple gaps in the existing framework for taxing Online Information and Database Access or Retrieval (OIDAR) services under IGST. It noted that foreign suppliers who often have no fixed base in India are not captured by current audit or reporting rules. As a result, the government cannot verify how much these companies earn from Indian users, nor track GST payments made under the reverse-charge mechanism by non-registered online customers.

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Although the IGST Act requires overseas OIDAR providers to register in India and imposes tax liability (for instance, via Section 14 and the definition of “non-taxable online recipient”), there’s no practical system to enforce those rules or to collect detailed invoice data. This loophole, the submission argued, gives foreign suppliers an unfair advantage over domestic businesses and drains precious foreign exchange from the exchequer.

The remedies proposed include a dedicated mechanism to monitor GST on OIDAR services consumed by Indian recipients under reverse charge, changes to return formats (like GSTR-5A) or introduction of a new form to report revenues from non-registered online recipients, a process to verify total receipts of overseas suppliers and confirm their GST compliance, a requirement for foreign providers to maintain a fixed Indian establishment or open their books to local authorities and a nationalized compliance and reporting regime for all OIDAR suppliers.

By steering the petition to the GST Council, the Supreme Court has signalled that any policy tweaks or enforcement measures must originate in the legislative and administrative arena, not through judicial directions.

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