Import of Service i.e. Payment to architect of Dubai for construction of House in India

[Sumeet Tholle]

Dear Sir,

One of the client constructed home for himself at Aurangabad- Maharashtra and for which he paid Architect Fees to the architect of Dubai in Dubai's currency.

The complete transaction took place during January 2012 to May 2012 i.e. before Jully 2012.

 Department demanding Service Tax under Import of Service and saying expenditure on bunglow is not for personal use.

We submitted Sec. 66A,

Sec. 66A - Charge of service tax on services received from outside India:-

(1) Where any service specified in clause (105) of Section 65 is, -

(a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and

(b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply:

Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply:

Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided.”

Kindly Guide.

Sumeet C. Tholle,

CA, Aurangabad.

AI Summary

Architect Services for House Construction Abroad: Tax Department Dispute Over Import of Service and Section 66A Exemption A client in Aurangabad, Maharashtra, paid an architect in Dubai for services related to constructing a house in India between January and May 2012. The tax department demands service tax under the Import of Service, arguing the expenditure is not for personal use. The client references Section 66A, which taxes services received from abroad unless for personal, non-commercial use. A reply suggests that service tax is not payable due to the lack of an enabling provision in the Place of Provision of Services (POPS) rules and a mega exemption for services not related to business or commerce.