Service tax on serivce used in china

[VIJAY GUPTA]

One of my client is importing some material from China which requires some testing certifications. For these certifications our foreign supplier arrange testing agency which took material samples from supplier's premises & perform testing & again after testing submit tested material alongwith certificate of tested material with our China supplier.

But bill is raised by testing agency in our name (in USD currency) not in the name of foreign supplier who arrange that agency.

Now, my query is relating to Service Tax, whether the same would be applicable, as service provided and service rendered both are in non-taxable territory.

Please give \your valuable opinion.

Thanks

[CSSANJAY MALHOTRA]

Dear Vijay,

Service Tax is not applicable as the service has been provided, executed outside India.

Please go through the Rule 4 of "Place of Provision of Service Rules- 2012" which provides for Taxability of Performance based services.

4. Place of provision of performance based services.-

The place of provision of following services shall be the location where the services are actually performed, namely:-

 

(a) services provided in respect of goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service in order to provide the service:

In your case, the goods are made physically available outside India and hence the service of testing is rendered outside India, which are not subject to levy of Service Tax.

 

 

[DR.MARIAPPAN GOVINDARAJAN]

Service tax will not attract in your case.

[Ganeshan Kalyani]

I agree with both the experts.

AI Summary

Place of provision of services: testing performed abroad falls outside service tax territorial scope under place of provision rules. Under the Place of provision of performance based services rule, the place of provision for services requiring goods to be physically made available is where the services are performed. Sampling, testing and certification conducted on goods physically located in China are therefore services rendered outside India and fall outside the Indian service tax territorial scope.