Sponsorship services rendered by a trust to a foreign co

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Sangeetha N (Querist)

27 March 2014 Hello Fellow CAs and ST experts,

I solicit your advice on the ST issues cited below

Q1: When a trust has renders sponsorship services to a Company, the reverse charge mechanism works as per notification 30/2012 and the service receiver, namely the company is liable to pay ST. In this scenario, is the Trust required to ensure that this obligation is met by the company?

Q2:A trust had rendered sponsorship services in India and received contribution towards the same from a Foreign Company in the form of forex converted to rupees;

In this case is the Trust liable to ST, considering the foreign company is out of the ambit of Indian ST? Or is the entire transaction out of the ambit of ST , so that the Trust also is NOT liable to pay ST?

Pls clarify

Thanks in Advance

Arun Kumar Singh

Arun Kumar Singh (Expert)

27 March 2014 Body corporate or partnership firm is only liable to pay service tax under reverse charge system for sponsorship services. Trust is not covered under the body corporate so, you no need to pay service tax under reverse charge mechanism.

Sangeetha N

Sangeetha N (Querist)

27 March 2014 Thank youMr. Arun Kumar Singh,

I do understand that a Trust is not covered under reverse charge. Precisely my question is, in case such body corporate is a foreign company, it all out of the ambit of ST, so does the liability shift back to the Trust?

Arun Kumar Singh

Arun Kumar Singh (Expert)

27 March 2014 Actually Service recipient are liable to pay service tax for sponsorship services. You have made the payment on behalf of foreign client, you are not actual recipient.

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