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Import & export of services

CA Sandeep Bhatnagar (Practice) (1121 Points)

13 November 2007

A company is engaged in export of scientific & consultancy services on which service tax is not attracted since it is export of services, however the realisation of proceeds takes place through settlement of account as it is importing certain scientific & consultancy services from the same concern. Whether it can deposit service tax on the net amount upon making payment as receiver of services or it will have to deposit service tax on full amount ?

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2 Replies

Shaily Jain (Chartered Accountants) (1054 Points)
Replied 13 November 2007

on full amount

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Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 14 November 2007

Example Service Exported 100000 Service Received (Imported)150000 Net payable as import of services 50000/- ( as interpreted by you) In the said example if it fits your query then service tax is payable on the full amount payable i.e . Rs. 150000/- Moreover for you to justify the export of service, receipt of payment is compulsory, if adjustment is happening, it would be difficult to justify your claim for export. It would be ideal to treat the transactions separately to avoid litigation. To clarify further the service tax is on realization and payment, though in the nature of adjustment, the liability cannot be adjusted under any circumstances You may kindly evaluate your position in light of the above clarification