Taxability of Service provided by FOREIGN BASED COMMISSION AGENT

[SANTOSH SHARMA]

What will be the position of service receiver and provider in the following situation after the amendment made in the definition of “INTERMEDIARY” in the rule 2 (f) which is mentioned in Rule 9 of Point of Taxation of Service, 2012. The situation are given below:-

1. If we are receiving service of foreign based commission agent to sell of our finished goods on the mutually agreed percentage of Commission linked to sale. Presently we are paying service tax under BAS on RCM under Noti. No. 30/2012 ST Dt. 20.06.2012 once we make payment to them.

2. If commission agent also engage sub-agent for providing said service outside India with or without our concurrence where we are liable to pay commission to both agents either directly or through main agent.

3. On the other hand, If we are also engaged in providing service to foreign based clients for selling their products in India as well as outside India and receiving commission in freely convertible foreign currency which presently we are treating it as “EXPORT OF SERVICE”.

4.The point of taxation where commission agent’s commission accrues when we get Export Proceeds in our Bank account as per the agreement between agent and us.

PLEASE THROUGH SOME LIGHT ON ABOVE ISSUE.

Regards,

SANTOSH SHARMA

AI Summary

Place of Provision of Service determines recipient's tax liability under reverse charge for services received from abroad.
Services received in India from foreign commission agents are generally treated as provided where the service recipient is located, making the Indian recipient liable under the reverse charge mechanism for service tax when the provider is outside the taxable territory. CENVAT credit for service tax on sales commission depends on factual characterisation; credit may be allowed where the commission is shown to be for sales promotion, but is not permitted as a blanket rule. Application to sub-agents, direct payments, and export commissions requires case-specific analysis of establishment, contractual terms, and evidentiary proof.