Raising invoice
This query is : Resolved
11 February 2012
Company A is registerd in Delhi. It enters into an agreement with Company B which is also registered in Delhi. B has a branch in J&K. A provides services in J&K branch of B but issues invoice at Delhi head office.
Is service tax applicable to this transaction?
Is service tax applicable to this transaction?
11 February 2012
Service tax is destination based consumption tax. As per Section 64 of Finance Act, 1994 if services are provided in J & K then it will be out of purview of service tax irrespective of location of service provider and service receiver.
Therefore, In this case service tax is not applicable.
Therefore, In this case service tax is not applicable.
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19 July 2025
Key Points:
Place of Provision of Services (POS) Rule for Branch Office Services:
As per Rule 9 of Service Tax Rules (Place of Provision of Services Rules, 2012):
If the service is provided to a branch office or project office located outside the state of the recipient’s registered office, then the place of provision is the location of the branch/project office where the services are actually provided.
What does this mean here?
Since services are provided in J&K branch of Company B, and branch is outside Delhi (state of recipient's registered office), POS is J&K.
J&K is considered a 'Union Territory' and was exempt from service tax till June 30, 2017.
Therefore:
Service tax is not applicable on services provided in J&K because of exemption.
Even if invoice is issued in Delhi, service tax should not be charged.
Place of Provision of Services (POS) Rule for Branch Office Services:
As per Rule 9 of Service Tax Rules (Place of Provision of Services Rules, 2012):
If the service is provided to a branch office or project office located outside the state of the recipient’s registered office, then the place of provision is the location of the branch/project office where the services are actually provided.
What does this mean here?
Since services are provided in J&K branch of Company B, and branch is outside Delhi (state of recipient's registered office), POS is J&K.
J&K is considered a 'Union Territory' and was exempt from service tax till June 30, 2017.
Therefore:
Service tax is not applicable on services provided in J&K because of exemption.
Even if invoice is issued in Delhi, service tax should not be charged.
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