Query in regard to Service Tax [Export of Services]

Queries 1126 views 5 replies

Sathish Karunakaran

ACA

618 Points Joined March 2007

I have two queries in regard with Service Tax. Kindly resolve me.

a) My client provides services to foreign buyer of machinery in respect of searching indian
supplier of such machinery and based on value, commission is charged to Foreign buyer for services provided. Obviously the services are covered under head "Business Auxillary Services". "Business Auxillary Services" come under category III, Rule 3 of Export of Service Rules, 2005. A service will be deemed to be exported under category III, when the recipient of such services being a business concern is located outisde India. Here in this instance, is the location of service recipient enough to deem it as exported services, notwithstanding the service provider has performed his functions within India or the services must not be treated as export of services to tax the same.

b) Should the exporter of Services register himself to claim refund of tax, cess paid on inputs and input services under Rule 5 of Export of Services Rules,2005?

Thanks

Replies (5)

Rajesh Kumar

Advocate- Tax

7806 Points Joined December 2008

This is an export of service, and hence no service tax is required to paid on this service.

The exporter of this service tax can claim rebate/refund of Central Excise duty/service tax paid on inputs and input services.

Guest

It appears that service provided by the Indian company has been used in India and therefore such service cannot be considered as export.

jitender

27 Points Joined January 2009

Whether service provided under business auxiliary service by a subsidiary company in India on behalf of foreign holding company is considered as export of service ? After providing the service on the instruction of its only client which is also its holding company, the subsidiary private limited company raises its consultancy invoice on the holding company and receives the foreign inward remittance. Kindly reply citing the provisions of service tax laws. Thanks.

Guest

The question of subsidiary company vis-s-vis holding company is irrelevant as both are seperate legal entity.

Rajesh Kumar

Advocate- Tax

7806 Points Joined December 2008

Well, Dinesh- the quetion is very clear, the service receiver (foreign buyer) is outside india and the services are being consumed outside India.

Thus as per the definition of export, as per Export of Services Rules, the transaction is a transaction in export of services and eligible for benefits as export of services.