In the Afortune Trading Research Lab case, the Hon'ble Madras High Court held that when export proceeds are received through intermediaries like Paypal in INR, it satisfies the requirement u/s 2(6) of the IGST Act, 2017 dealing with export of services.
The Hon'ble Court makes specific reference to Reg. 3(2)(b) and Reg. 3(3) of the FEM (Manner of receipt and payment) Regulations, 2016 in arriving at the conclusion that amounts received through intermediary like Paypal qualifies for 'export of services' and consequently eligible for refund.
FEM (Manner of receipt and payment) Regulations, 2016 has been replaced by FEM (Manner of receipt and payment) Regulations, 2023 from December 2023 and in the new regulations there are no regulations which is same/similar to Reg. 3(2)(b) and/or Reg. 3(3) of erstwhile regulations. Considering this development, can the above case be considered as 'precedent' or can the reliance be placed in future is an aspect to be considered.
Reg. 3 of the new regulations states that receipts and payments between persons in India and persons outside India shall be made in the manner laid out in the Regulations and Reg. 3(1) begins by stating that manner of receipt and payment as provided in Act or Rules or Regulations or Directions issued under the Act hold good.
Master Direction on Export of goods and Services, 2022 provides for receipts through OPGSPs - Online Payment Gateway Service Providers and allows AD bankers to enter into arrangements with OPGSPs for facilitating the transactions. This also provides for maintaining a separate NOSTRO collection account for each OPGSPs.
It would be safe to say that receipts through intermediaries, even under the new regulations of 2023 will satisfy the requirements of export of services u/s 2(6) of the IGST Act, 2017.
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