Service tax on reverse tax mechanism

Sunil (Trader) (2611 Points)

19 March 2013  

Since 1/7/2012 a service is taxable if it does not fall under the negative list and if it is provided or deemed to be provided in taxable territory.

However, in RCM it is mentioned that if service provider is in non taxable territory and service receiver is in taxable territory, then the service tax on the services received is payable by the receiver.

Does this mean that if services, whether taxable or under negative list or exempt or provided in non taxable territory are received by a business in India from a provider in a non taxable territory, the same would be subject to service tax?

Eg. if a person goes on business tour abroad and avails of following services:-
1) Hotel room above Rs.1000 (taxable in India but by place of provision rule not taxable as in non taxable territory)
2) Metered Taxi (Not taxable in India under negative list.
3) Eating food in a/c restaurant (taxable in india but provided in non taxable territory as place of provision requires the presence of individual. In India a foreigner would also be charged service tax by provider for such service)

Although these should be exempt, is the RCM also applicable for services that are determined to be not taxable if received by Indian businessman from foreign provider in non taxable teritory?