Hello,
There is a company which represents a foriegn company in India. An order was placed by a client Indian company on the foriegn company for supply of some goods. The Indian company had 3% agency comission-for which it raised bill on the buyer of goods for agency comission in INR(this was required by the Indian company).
Now the Indian company is not making payment of service tax claiming it merely paid on behalf of the foriegn company, who is not liable to service tax. The service of agency was consumed by the foriegn buyer-who is located out of India-and is covered by Export of Service Rules. However, the payment was recieved in INR from the Indian client.
What is the correct tax position??
Regards.
CAclubindia
