Erection and commissioning at overseas - regarding

[Guest]

Dear Sir,

We would like to introduce ourselves is a Heavy CNC Machine Manufacturer and Situated in SIPCOT Industrial Estate. Irrungattukottai, Sriperumbudur - 602105.We have received Purchase order for supply ofCNC FHB Machine order from Bangalore Company in INRErection and commission order in INR and it was exported by the Bangalore Company to Kuwait (Overseas Company).

We have Erected and Commissioned the machine at Kuwait and we have raised the invoice for erection and commissioning in favour of Bangalore company in INR.

My question is that, whether we have to include the service tax or we have to raise the invoice with out service tax. We have not direct connection with the Kuwait Company and Purchase order received from Bangalore Company.

Please clarify with service tax notification for applying the service tax in the invoice.

Thanks and Regards

V.Sridhar

Chennai - 602 105.

Mobile No:9600030375

[KASTURI SETHI]

Dear Sir,

It is ultimately export of service. Invoice is to be raised without Service Tax. Suppose A is a manufacturer. B is purchaser & exporter. C has received the machine in Kwait and C has received erection, commissioning & installation services. A has provided service to C on behalf of B. Assuming that B would receive foreign exchange for goods and services from C. Enjoyment of service is outside India. It conforms to the parameters of Rule 6A of Service Tax Rules, 1994 read with Rule 3 of Place of Provision of Rules, 2012.Hence not taxable. It is my view.

[Ganeshan Kalyani]

Sir, service tax is a consumption based tax. The consumption of the service in your case is in non-taxable territory. Hence no service tax.

[KASTURI SETHI]

Sh.v.sridhar sridhar,

I fully endorse the views of Sh.Ganeshan Kalyani, Sir.

[Rajagopalan Ranganathan]

Sir,

As per your narration you have Erected and Commissioned the machine at Kuwait (Non-taxable territory). The service is provided in non-taxable territory and hence it will be treated as export of service. Since it is avowed policy of Govt. not to export the taxes, you need not pay any service tax on erection and commissioning of the machine at Kuwait.

AI Summary

Export of services: erection and commissioning performed abroad is outside service tax and invoice should exclude service tax. Erection and commissioning carried out in a foreign country for an overseas beneficiary, even when contracted through an Indian purchaser/exporter, constitutes export of services under the place of provision rules and Rule 6A; therefore the supplier should issue the invoice without charging service tax, documenting overseas performance and beneficiary.