Service Tax Applicable for Overseas Company - Suggestion Require

[Guest]

Dear Sir,

We Singapore based company appointed Indian Freight forwarder company to pick-up a consignment from South Korea to Navasheva Port.

We will be making payment from Singapore in US$ to Indian Freight forwarder company, does we have to pay Services tax.

Freight forwarder invoice includes of Freight Charges, Ocean Port Charges, Switch Bill of Lading Charges, Documentation Fees, Custom Clearance Charges at South Korea, Transportation Charges at South Korea, Agency Fee, Charge to Collect Fee, Courier Fee.

Please suggest do we being Singapore based company liable to pay services Tax on Invoice issued by our Freight Forwarder based in India.

Please suggest, if possible pl. write Service Tax article no. for our study.

Regards,

Jeff D.

Tech Products Pte. Ltd.

Singapore

[Rajagopalan Ranganathan]

Since the Freight Forwarder Company is located in India service tax is payable by that company and not by you. Since the service is provided at Navasheva which is in India the service provided by the Freight Forwarder is liable to service tax and the said Freight Forwarder is liable to pay service tax. However the Freight Forwarder can collect the service tax from you under his invoice.

[RAMA KRISHNA KNVS]

One should refer to place of provision rules to judge on applicablity of Service tax

[Akash Deep]

Dear Sir,

Please not that the place of provision of services provided by a freight forwarder is to be determined under Rule 3 of Place of provision of services Rule, 2012 and place of provision shall be singapore. Being so service tax is not leviable on the transaction and company is not liable to pay service tax on the invoices raised by freight forwarder.

in fact services of freight forwarder is appears to export of services as per Rule 6A of the Service Tax Rules, 1994.

Mr. Jaff your company is not liable to pay service tax on the invoice raised by Freight forwarder.

[RAMA KRISHNA KNVS]

As Mr.Akash right explained, there happen export of service. exported services are exempted. so, No service tax can be chraged by Freight forwarder. so Service tax burden on the recepient of service.

good day.

ram

[PARTHASARATHY V]

Referred service is not export of service, it is falling under Import category, the service provider (Forwarder) doing services at Korea as well as India. In the Indian port service provided by the Forwarder, such as CHA charges, Freight etc will attract the service Tax and they have to collect from the service recipient Singapore Company.

Service Provided at Korea is not coming under the ambit of the Service tax.

[Akash Deep]

Dear Mr. Parthsarathy,

As per Rule 2(1)(d)(G) of Service tax Rules, 1994 import can happen only if service receiver is located in taxable territory and service provider is in non -taxable territory. in the instant case service receiver i.e Singapore based company is located in non-taxable territory, so there is no question of import of services. Further, Finance Act, 1994 is not applicable to Singapore based company as it is beyond the territorial jurisdiction of the Finance Act, 1994 (Sec 64). i am sure this is not a case fit ot apply doctrine of extra territorial jurisdiction available under Constitution of India.

AI Summary

Place of provision rules determine whether cross-border freight-forwarding services attract service tax for the foreign recipient. Liability for service tax depends on the place of provision and territorial rules: one position holds that services rendered at the Indian port by an Indian freight forwarder attract service tax payable by the provider (recoverable from the foreign recipient), while an alternative position treats the supply as export of services with the place of provision in the foreign recipient's territory, making service tax not leviable on the Singapore company. Import-of-services rules are said not to apply because the recipient is located outside India.