Services provided to j&k

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2015 Hi,

I am located in taxable territory and have provided services in J&K and did not charge service tax as these services will be consumed in J&K state. Services which I have provided in J&K against that there are input services and vendor want to charge service tax because as per vendor he has provided services to me in taxable territory. I have taken declaration from the client and given same declaration to vendor stating that services will be final consumed in J&K. Is there any notification regarding to convince our vendor.

Thanking you.

gbalakrishnan

gbalakrishnan (Expert)
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19 July 2015 VISIT THE NEAR BY INCOME TAX OFFICE AND MEET PRO AND HE CAN HELP U

Querist : Anonymous

Querist : Anonymous (Querist)

19 July 2015 My query is related to Service tax not Income tax.

Thanx

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Your query pertains to **service tax applicability** on services **provided to Jammu & Kashmir (J\&K)** prior to the introduction of GST (i.e., under the **Finance Act, 1994**).

Here’s a **clear answer** to your situation:

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### ✅ **Key Legal Position (Pre-GST Service Tax Regime)**

1. **Service tax** was **not applicable** to the state of **Jammu & Kashmir**, as per:

> **Section 64(1)** of the Finance Act, 1994:
> *“This Chapter applies to the whole of India **except the State of Jammu and Kashmir**.”*

2. If **service is performed and consumed entirely in J\&K**, **no service tax is applicable**, **even if the service provider is located in taxable territory**.

3. **Vendors (your input service providers)** are technically correct if they provide services to **you** in a **taxable territory**—their liability to pay service tax **does not change based on your end-client’s location** (i.e., J\&K).

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### 🎯 Your Case:

* You provided **output services to a client in J\&K**, and hence **you are not liable for service tax**.
* But your **vendor provided input services to you in taxable territory**, so **they are liable to charge service tax** on their invoice to **you**.
* The **fact that you further rendered services to J\&K** does **not affect your vendor’s tax liability**.

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### 📝 Important Clarification:

There is **no notification** that **exempts input services** from service tax just because **you are rendering output services to J\&K**.

The **CENVAT Credit Rules** also did **not permit availing credit of input services** if the output service is **non-taxable (like services provided to J\&K)**.

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### ✅ Conclusion:

* **You are right** in not charging service tax to your J\&K client.
* **Your vendor is also right** in charging you service tax, since they provided taxable services **to you**, in **taxable territory**.
* There is **no exemption or notification** that allows you to stop your vendor from charging service tax based on end-use in J\&K.
* **You cannot claim CENVAT credit** of that input service tax, because your output service is **non-taxable**.

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If you need draft communication to explain this to your vendor or client, I can help with that too.

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