Short query regarding import of service

Dear All,

We have sent one of our employee ( permanently employed at our Indian office) for training outside India for 4 days and have paid training fees to the service provider. Service provider is outside India and services have also been rendered outside India. We have booked expense under training and development fees. Also we have paid in foreign currency.

Our contention is that since services have been provided and received outside India, they will not form part of Import of service.

Department has a stand saying that employee belongs to a company of India and training received by him will be used by company in India. So It falls under definition of Import of service.

Request you all to please provide your expert inputs on the same citing case laws if any.

The word ‘import’ is used just to indicate service provided by a person who has established his business or has his permanent address outside India and the recipient of such service is such a person who has his permanent address or usual place of business in India.

Section 66A of Finance Act 1994 read as Follows

66A. (1) Where any service specified in clause (105) of section 65 is,— (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is

provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and

(b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply:

In your case the even though the service is received out side India and payment in foreign currency you will be liable for payment of service tax because the ACT specifically says by the words RECEIVED BY A PERSON and not the place of receipt. As you satisfied all the conditions in the ACT in my point of view you are liable to payment of tax.