30 September 2013
Is service tax payable on buyers premium charged for auction of artwork (movable property)to foreign buyers i.e Export ???. Please interpret the same as per Place of provision rules.
24 July 2025
Great question! Here’s a detailed explanation on **service tax on buyer’s premium charged for export of artwork via auction** and its applicability under the **Place of Provision of Services Rules, 2012**:
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### 1. Buyer’s Premium on Auction of Artwork:
* Buyer’s premium is the additional charge collected by the auctioneer from the buyer, over and above the hammer price of the artwork. * It is considered a **service provided by the auctioneer** to the buyer.
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### 2. Is Service Tax Applicable?
* Service tax is generally payable on **auction services** under the category of "Business Auxiliary Services." * However, when the **buyer is located outside India** (foreign buyer) and the artwork is exported, **export of service provisions** come into play.
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### 3. Place of Provision of Services Rules (POPS), 2012:
* According to POPS Rules, **auction of movable goods** is an **"event-based" service**. * **Place of provision for auction services is the place where the auction takes place** (Rule 10(b) of POPS). * Therefore, the place of provision is India if the auction physically occurs in India.
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### 4. Export of Service Criteria (Section 66A of Finance Act, 1994):
For a service to be considered as **export of service** and hence **zero-rated (no service tax applicable)**, it must satisfy all these conditions:
1. The service provider is located in India. 2. The service recipient is located outside India. 3. The service is used **outside India**. 4. The payment for the service is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI.
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### 5. Interpretation for Buyer’s Premium on Auction of Artwork:
* Since the **auction is conducted in India**, the place of provision is India. * The buyer (foreign buyer) is located outside India, so condition (2) is met. * If the artwork is physically delivered/exported outside India, the **service is used outside India** (condition 3). * Payment is received in foreign exchange (condition 4).
Hence, the buyer’s premium service can be considered as **export of service** and **no service tax is payable (zero-rated service)** on this buyer’s premium.
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### Summary:
| Condition | Status for buyer’s premium on exported artwork auction | | ------------------------------- | ------------------------------------------------------ | | Service provided in India | Yes (auction location) | | Service recipient outside India | Yes (foreign buyer) | | Service used outside India | Yes (export of artwork) | | Payment in foreign exchange | Yes | | **Service tax applicability** | **No (export of service – zero-rated)** |
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If you want, I can help draft a formal note or letter to clarify this with the tax authorities or your clients. Would that be helpful?
CAclubindia
