A is exporting engineering services to the USA and earning foreign exchange -clear that there is no service tax for A as it is export of services.But from time to time A uses the services of a foreign consultant B (who has no base in India) to assist in his studies and pays him also in foreign exchange and submits the final report to the foreign customer..Now is the payment to the foreign consultant B liable to attract service tax -as the services are ultimately consumed abroad some feel it is not while some feel it is under reverse charge mechanism..any pprovision to clear this up in ST rules??
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Export of service
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If the foreign consultant is helping him in studies where some goods are coming in his possession then rule 4 of Place of provision rules, 2012 will be applicable. Place of provision will be outside the taxable territory where the services are actually performed. And if he is just helping him out then default rule 3 of Place of Provision Rules, 2012 will be applicable which says location of the service recipient being "A" located in taxable territory will be place of provision, then it will become import of service.
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