Applicability of service tax

This query is : Resolved

VIPIN GUPTA (Querist)
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05 December 2016 Sir one of our client is registered in taxable territory and has rendered erection and comissioning service at bhutan. The amount is received in convertable foreign exchange and in due time. Whether service tax will be applicable. Whether we have to reverse the cenvat credit on inputs or input service used in providing such service. The audit party is pressing on that we have to pay the duty as per notification 39/2012. We donot want to take and refund or any rebate of duty. Then also is it mandatory that we have to be guided by notification 39/2012.

Regards

Vipin

CA SAGAR M. AHUJA

CA SAGAR M. AHUJA (Expert)
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06 December 2016 As Your Query .....
1. There is no need to pay S.tax on such service as service is provided out of India, as it is well settled that service tax is destination based consumption tax and hence service tax cannot be imposed on service provided or consumed outside India.
2. As you claimed Cenvat Credit of Input and Input services that itself shows that you do not need to claim the rebate at all as you had taken cenvat in return
As Per my view the only effect is that rebate will not be allowed, and rule 6 of Cenvat credit Rules (Credit Reversal on proportionate basis) will apply.means you have to reverse the cenvat credit.
For Further Details on views you can check following link......
http://www.club4ca.com/formats/wp-content/uploads/2013/10/St_refund_1.pdf
Thanks.