SERVICE TAX APPLICABILITY - BUSINESS AUXILARY SERVICES

Dear Members,

We are one of the merchant exporters who do not have any local sale.  We only trade in goods and do not export or render any services.  We used to pay Sales commission to our foreign agents for the orders we get through them.  Recently we have received a service tax notice from service tax department asking us why service tax should not be levied on Sales Commission remitted by us abroad . As per the department's contention Commission paid to non-residents are covered under "BUSINESS AUXILLARY SERVICES" and we being service receipients are liable to pay service tax.

We are of the opinion that our agents are non-residents and are not situated in India.  The services rendered by them are from outside India and hence this is not covered under the service tax bracket.

Pl. advise whether we are liable to pay service tax as a service recepient under the head "BUSINESS AUXILLARY SERVICES" for remittance of sales commission to non-residents.

Regards,

Manjunath