Service tax on overseas coaching services applies only when the services are performed in India, not when reimbursed later.

Under Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, coaching services are taxable only when performed in India. The services here were rendered by foreign institutes, received abroad by the employees, and later reimbursed by the assessee; concurrent findings below held that performance was outside India. The HC rejected the argument that the rule deems such services to be performed in India merely because reimbursement was made in India, and held that no service tax was payable.

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Issues: Whether service tax was payable on coaching services received abroad by the employees of the assessee for the period 19.04.2006 to 30.09.2006.

Analysis: The liability under Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 applies only where the relevant coaching services are performed in India. The services in question were rendered by institutes situated abroad, were received abroad by the assessee's employees, and were merely reimbursed by the assessee. The factual findings of the Commissioner (Appeals) and the Tribunal were concurrent that the services were performed outside India. The Court rejected the contention that the rule could be read as deeming such services to have been performed in India.

Conclusion: No service tax was payable on the coaching services received abroad, and the Revenue's appeal failed.

Ratio Decidendi: Under Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, service tax on coaching services is attracted only when the services are performed in India; services rendered and received outside India do not become taxable merely because the expenditure is later reimbursed in India.

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