Raising invoice

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Shivish Verma (Querist)
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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?

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Expert)
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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.

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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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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.

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