Is Service Tax payable on Services Received outside India under RCM?

[Sumeet Tholle]

Dear Sir,

One of the my client ( bases in India) in the business of ginning and pressing of Cotton bales. They supply cotton bales to textiles mills at Pakistan. For Sale/recovery purpose, they pay commission in foreign exchange to brokers of Pakistan.

Department demanding Service Tax under RCM. Is department correct ?

I am of view that as services received outside India, hence no service tax payable.

Pl. Guide.

The period involve is before Jully 2012 also and after July 2012 also.

Thanks.

Sumeet Tholle,

CA

AI Summary

Debate on Service Tax Applicability Under Reverse Charge Mechanism for Foreign Broker Services Post-2014 Exemption Removal A discussion on a forum addresses whether service tax is applicable under the Reverse Charge Mechanism (RCM) for services received outside India. An Indian business pays commission to brokers in Pakistan for cotton bale sales. Some participants argue that service tax is applicable since the service receiver is in India, a taxable territory. Others contend that since the services relate to sales in Pakistan, they are not received in India, thus not subject to tax. A notification from 2012 exempts certain services provided by foreign agents to exporters from service tax, but this exemption was rescinded in 2014.