Service Tax on Import of Services

This query is : Resolved

Jayesh Jagetiya (Querist)
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05 January 2009 We have received a bill from a foreign company for the work done by him on behalf of our company. We have made him payment also.

Service Provider: - Foreign company
Service provided at – out of India
Payment made by – our company (a domestics company)
Service recipient – Foreign Company (our client)
Nature of service - Erection & commisioning

Will this come under the preview of IMPORT OF SERVICE?
Are we liable to pay service Tax on the same?

Rajesh Kumar

Rajesh Kumar (Expert)
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06 January 2009 The fundamntal issue in this case is where the service was provided. In case of erection and commissioning, whereever erection and commissioning was done is the place where service was provided.
If the erection and commissioning was done in India (i.e. the plant erected and commissioned is in india), it amounts to import of service and service tax is payable under Section 66A.
However, if erection and commissioning is done outside india, it amount to providing of services outside india. It is not import of service. It is service provided outside india. when the service is provided outside india, no service tax is payable as service tax law is applicable only in india and not outside india.
I have written a paper on this issue in Service Tax Review. Refer to that if possible.

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