There is a partnership firm 'X & Co.' and is the sole selling agent of a foreign company 'A Inc.'(the co. doesn't have any kind of office in India). This A Inc. is engaged in the manufacture of products to be used by industries. X & Co. does marketing for the product of A Inc. in India and secures order for the same. Then forwards this order to A Inc. , which delivers the goods directly to the purchaser company in India, raises invoices in their name and also collects payments directly from them in foreign currency. For the services so offered, X & Co. get commission based on the volume of order so acquired. X & Co.'s commission,which is in foreign currency , is directly deposited by the A Inc. in X & Co.'s bank account here in India.
Isn't it export of services?
Dear Sir,
The service rendered by the firm is 'business auxiliary service'. This falls in the third category in Export of Services Rules, 2005 i.e. under Rule 3 (1) (iii). For this category, export is defined as export if the recipient of the service is located outside India.
For this category the place of performance of service is not relevant.
Further, since the service is received and used by A Inc. in a foreign country, it can be said that the service was delivered and used outside India.
Other conditions viz. receipt of payment in convertible currency is also fulfilled.
Therefore, this is certainly export of service.
Thanks,
Sanjay Dwivedi
[My personal views please]
CAclubindia
