Service rendered outside india.

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This query is : Resolved

Vaibhav (Querist)

13 April 2016 Dear Experts,

We are Indian resident registered under Business Auxilary service and rendered service in abroad (in China) for our Indian customer (Located in Taxable territory).That is, services are rendered towards export of goods from India to China .Also raised invoices in India in INR. Can we charged service tax to our customers towards service rendered in outside India .??? Please reply with sections in act?

Vaibhav

Vaibhav (Querist)

14 April 2016 Please revert unrgently.........

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

24 July 2025 You're asking about service tax applicability for a service rendered outside India by an Indian company, under Business Auxiliary Service (BAS), as of 13 April 2016 (pre-GST).

Let’s break it down clearly using relevant legal provisions, especially the Place of Provision of Services Rules, 2012 and Rule 6A of Service Tax Rules.

✅ Summary of Your Case
Criteria Details
Service Provider Indian resident (you)
Service Receiver Indian customer (located in India)
Service Rendered Outside India (in China)
Nature of Service Business Auxiliary Service (export-related support)
Invoicing In INR
Query Is service tax applicable? Can we charge service tax on invoice?

🧾 Step-by-Step Analysis:
1. Is the service an “Export of Service”?
As per Rule 6A of the Service Tax Rules, 1994, a service qualifies as export of service if all these conditions are met:

✅ Conditions under Rule 6A:
Service provider is in taxable territory (India) ✅

Service recipient is located outside India ❌ (your recipient is in India)

Service is a taxable service ✅

Service is provided from India and used outside India ✅

Payment is received in convertible foreign exchange ❌ (you said INR)

Service provider and recipient are not merely establishments of same person ✅

In your case, two conditions fail:

Recipient is not outside India (they are located in India)

Payment is in INR, not foreign exchange

❌ So, your service is NOT considered an export of service.

2. Place of Provision of Service (POPS Rules, 2012)
As per Rule 3 – General Rule of POPS Rules:

Place of provision = location of service recipient, unless a specific rule applies.

➡️ Since no specific rule overrides this (e.g., for performance-based or intermediary services), and your recipient is in India, the place of provision = India (i.e., taxable territory).

✅ Final Conclusion:
✔️ Yes, service tax is applicable.
Even though services were rendered outside India, the recipient is in India, and payment is in INR, so:

Place of provision = India

Not export of service (Rule 6A conditions not met)

📚 Legal References:
Rule 6A of Service Tax Rules, 1994 – Export of Service Definition
→ Conditions for export of service – Rule 6A

Rule 3 of Place of Provision of Services Rules, 2012
→ Place of Provision of Services Rules

Section 66B of the Finance Act, 1994:

Service tax is levied on all services provided in the taxable territory, unless in the negative list.

💡 Practical Tip:
To make the service non-taxable (export) in future:

Make sure your recipient is located outside India

Receive payment in convertible foreign exchange

Structure contract clearly as export of service

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