Service tax on animation services to foreign clients.

Dear Mr. Dinesh,

You are providing services to client who are outside the taxable territory (outside India), Hence you are not liable to pay service tax as this is considered as export of services (refer below).

RULE [6A. Export of services. —(1) The provision of any service provided or agreed to be provided shall be treated as export of service when,

(a) the provider of service(You) is located in the taxable territory (India),

(b) the recipient of service(Foreign Clients) is located outside India,

(c) the service is not a service specified in the section 66D of the Act,

(d) the place of provision of the service is outside India, (as foreign client  is outside India, POP is outside India) 

(e) the payment for such service has been received by the provider of service in convertible foreign exchange (as you said you are receiving in Dollars), and

Dear Jayesh,

Sorry to say this, your understanding is not correct.

Reverse charge is applicable on spectified category of services in 30/2012 ST dated 20.06.2012, in above case you referred the case as import of service, Where if any business entity is receiving service from non-taxable territory, then it is treated as import of service and place of provision is location of service receiver (Rule 3 of POPS Rule).

But this case is export of service.

Dear Jayesh,

Sorry to say this, your understanding is not correct.

Reverse charge is applicable on spectified category of services in 30/2012 ST dated 20.06.2012, in above case you referred the case as import of service, Where if any business entity is receiving service from non-taxable territory, then it is treated as import of service and place of provision is location of service receiver (Rule 3 of POPS Rule).

But this case is export of service.

Dear Prakash,

Thanks for the reply.. As you mentined the Place of provision in my case is outside India, but in reality I am working in india only, I am just sending my final outcome or final files on emails and through other web services to my client.. So is it still considered as export of services ??

And if yes, then can I get back the money which I have already paid to the government in the form of ST? Pls help.. Thanks!

Dear Prakash,

Thanks for the reply.. As you mentined the Place of provision in my case is outside India, but in reality I am working in india only, I am just sending my final outcome or final files on emails and through other web services to my client.. So is it still considered as export of services ??

And if yes, then can I get back the money which I have already paid to the government in the form of ST? Pls help.. Thanks!

As per Rule 9 of place of provision rules, location of service provider is POP for (b)Online information and database access or retrieval services

Rule 2(l) defines ‘online information & database access/retrieval           services’ to mean providing data or information, retrievable or    otherwise, to any person, in electronic form through a computer        network e.g. web based services like matrimony services, social   networking sites, online subscripttion of newspapers, weather             reports, etc.

Following are not covered:

1. Sale/purchase of goods etc. over the internet

2. Telecommunication services provided over the internet including fax, audio conferencing, video conferencing and telephony

"3. A service which is rendered over the internet, such as architectural drawing or management consultancy through email"

4. Repair of software, or of hardware, through the internet, from a remote location

Your service may cover under excluding category. If so, then you will covered under Rule 3 I.e location of service receiver is POP. So export of service.

Pls read the definition given above and confirm whether your facts will fit under this or not.

I request you kindly share complete facts when you are asking any queries.

To be specific here is what I do :

For example, Mr. A is making a film in USA, he needs some animation to be added in his film. He will then send all the clips or footage to my company (over Internet) and we (who are sitting in India) will recieve the clips or footage, will add the animation on it in our studio and send back all the clips and footage to our the client through internet only.. Please note that in this whole process neither me or anyone from my team is going to  is visiting USA.

So is this considered as the export of service ? 

Correct me if I'm wrong, you are receiving clips and putting it into animated software's like CAD, CAM etc to do animation as required by client.

Hope your not changing any content or adding any content Except animation.

If this is the case, then I can say that your service would not fit under Rule 9 and it comes under Rule 3 where PoPs is location of receiver. Hence export of service.

Please note there is thin line gap to determine whether it is Export of service or not.

Yes, thats correct !

So now my next concern is, can I get back the money which I have already paid to the govt in the form of Service Tax? I did this type of service in the year 2013-14 and I recieved the payment in 2014-15 and I paid the ST in the same year ..

You can claim refund but for only one year from relevant date I.e date of refilimg returns or date of payment.

My suggestions

1. Obtain legal opinion on the issue

2. Go for refund, if you had paid substantial amount as ST.