Service tax liability

[Asked by Guest]

i am registered with service tax department. I am entering into a contract with a government agency having head office in Delhi. The service contract is to be signed in Srinagar (J&K). The service is to be provide in J&K. The payment for the said contract has to be made from J&K. Do i need to charge service tax on this service or am i exempt from this tax as there is no service tax in J&K

[KASTURI SETHI]

Exemption is available only if Service Provider is located in J&K. However, "Contract for which service ?" That is also very crucial. Terms and conditions of the agreement must be in letter and spirit of Service Tax law. Contract must not be contrary to the provisions of Service Tax law i.e. Finance Act, 1994 as amended. During my service I have come across such agreements which were executed contrary to the Service Tax law. If there is conflict, Service Tax law will prevail over the Contract Act.

I have to provide services to Doordarshan Kendra Srinagar. Prasad Bharati New Delhi is going to give orders to Doordarshan Kendra Sringar to enter into an agreement with me for their required services. I have to provide those services at Doordarshan Kendra Srinagar and they are going to pay me from their own budget in Srinagar itself. I have come to know that even if someone out of the state of J & K is providing services in that state itself is neither liable to charge or pay service tax to government.

Secondly i wish to ask if service tax can be charged twice on one particular subject. What I mean is that suppose Doordarshan has acquired some program from a producer and has paid service tax to that producer on his demand. Now they want to do some amendment in that already acquired and taxed program from some other source. Is it compulsory for Doordarshan to pay Service Tax on the bill raised by the other source. or is it mandatory for this third party to charge service tax form Doordarshan as they say that they have already paid Service Tax on this particular product and the third party is not liable to be paid Service Tax again.

[Rajagopalan Ranganathan]

Sir,

As per rule 3 of Place of Provision of Service Rules, 2012 the place of provision of a service shall be the location of the recipient of service. Since you are providing service to Doordarshan Kendra at Srinagar which is located in the State of Jammu and Kashmir you are not liable to pay service tax since Finance Act, 1994 is not made applicable to State of Jammu and Kashmir. As per Section 64 (1) of Finance Act, 1994, it (the Finance Act, 1994) extends to whole of India except the State of Jammu and Kashmir

[KASTURI SETHI]

Sh.Sunil Anand Ji,

I want to know complete and exact nature of service to be provided to Doordarshan Kendra, Srinagar. I mean to say what are "required services" as per contract as mentioned by you.

AI Summary

Place of Provision of Service determines tax liability; services to a recipient in Jammu and Kashmir fall outside central service tax.
Place of provision governs service tax liability: when the recipient of services is located in Jammu and Kashmir, the Place of Provision of Service Rules make that State the taxable location and the Finance Act, 1994's service tax levy does not apply there; contractual statements cannot displace the statutory territorial rule and liability depends on the location of the recipient and the taxable character of each supply.