Reverse charge

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Anmol Juneja

Student

74 Points Posted on 02 September 2014

I have a query which is as follows:-

“A” Co has a branch in Dubai where it is receiving consultancy services from a US co. and payment of such consultancy is being made by “A” and such expenses are also being booked in the books of “A” not in the books of that Dubai branch, So is this transaction an import of service involving service tax reverse charge liability? If it is import then how can “A” avoid service tax liability?

Plz rply asap. Thanks in advance.

Replies (3)

Gagan Deep Singh

CHARTERED ACCOUNTANT

1039 Points Posted on 03 September 2014

ST not applicable becoz services are not recieved by "A" co. but by its branch which is outside the taxable territory. For the application of ST it is must that services must be recieved in taxable territory.

Here taxable territory is India except J & K.

Anmol Juneja

Student

74 Points Posted on 04 September 2014

thanx for your reply but what wud be the case if bill is in the name of indian H.O. not the Dubai branch, other conditions same as above and H.O.has not passed a debit note to branch for the concerned payment.

Gagan Deep Singh

CHARTERED ACCOUNTANT

1039 Points Posted on 04 September 2014

In that case also my answer would be same becoz it can be argued that service has not been rendered in india.

Suppose a person in mumbai rendered construction services to another Person in Mumbai whose establishment is in Jammu & Kashmir and invoice is on the name of J&K office. In that case services become taxable becoz services rendered in taxable territory which is Mumbai.