Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Taxaiblity of service

Sathya Narayanan (Internal Audit) (26 Points)

23 September 2009

One of my client is rendering services in India to his UK customer's client in India. The invoice is raised in foregin currency on the UK customer. Let me know whether the same is subject to service tax

Reply
Follow
Share

4 Replies

Deepesh Jain (C.A (May 11 Batch)) (104 Points)
Replied 23 September 2009

IF THE NATURE OF SERVICE IS TAXABLE SERVICE

THEN IT IS TAXABLE

CHECK FOR EXPORT INCENTIVES

Upgrade to CAclubindia Pro. Subscribe Now!

Shyam Lal Naik (Service) (6156 Points)
Replied 30 September 2009

The recent judgement of tribunal in Microsoft's case supprots the view of Mr. Kiran. It is not an export of service.

Sathya Narayanan (Internal Audit) (26 Points)
Replied 30 September 2009

Hi,

I was told that services are exempt as per the cirular issued by the dept. The relevant cirular is 111/2009. To have more clarity on my query my client does implementation of a product developed by a company in UK. The implementation is done for a UK clients company in India. My client raised invoice on UK Company in convertiable foregin exchange. I think in light of the said circular the same is exempt....

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 03 October 2009

Two possible arguments as under:

The service could fall under erections installation commissioning services which is a performance based service. That is to say only if the service is performed outside India would it be considered as an export. In this case not export.

However in this case the service is provided to the client in UK therefore the service maybe one where service is provided on behalf of another under BAS. BAS is on recepient based service. In this case the service though conducted in Idnia is for the recepient outside India. In this case export.

Matter is not clear. Dept circular indicates where the benefit accrues. In this case benefit accrues in India. Maybe better to err in this side. If not paying may intimate the reasons in writing to dept and obtian dated acknowledgement.