Trading from Abreoad to Abroad treated as Ecempted Service?

[P Ovhal]

Dear Experts

My questions about Rule 6 of CCR

Trading sales activity is a Taxable Service? if trading sale make form abroad to abroad, trader can provide a Exempted Service? and liable to reverse CENVAT credit U/R 6?

Thanks

[Ganeshan Kalyani]

Sir, trading in goods is not a service liable for service tax. Thanks.

[Rajagopalan Ranganathan]

Sir,

As per Section 66D (e) of Finance Act, 1994 trading of goods is in the Negative List. hence the same is not liable to service tax. This is true for the activity of trading undertaken within taxable territory, that is, India excluding the State of Jammu & Kashmir. When trading within taxable territory is not liable to service tax, such activity carried out abroad (non-taxable territory is not at all taxable.

[KASTURI SETHI]

Dear Sh.P. Ovhal,

What I understand that you want to know whether cenvat credit is to be reversed on account of trading activity carried out from abroad to abroad. It is a fact that trading of goods is in the Negative List. Services which are listed in Section 66 D of the Act as Negative List of services on which no service tax is levied under Section 66 B of the Act shall be treated as exempted service for the purpose of reversal of cenvat credit under Rule 6 (3) of Cenvat Credit Rules, 2004.

Now presuming that you are not using common input services for providing non-taxable service from abroad to abroad, you are not required to include the said value while arriving at the exact amount of cenvat credit to be reversed under Rule 6(3) of Cenvat Credit Rules.

In case you are using common input services for providing non-taxable service i.e. trading of goods from abroad to abroad, you are required to include the value of trading carried out abroad to abroad.

What is the factual position ? You know.

This is my view.

 

 

[Ganeshan Kalyani]

Sir, what can be the services used in India for trading outside India ?

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

These input services are as under:-

1. Computer network 2.Telecommunication 3. Advertisement 4.Sales promotion 5.Business exhibition 6.Event Management 7. Market research 8.Financing etc.

The assessee may or may not be using all these.

[Ganeshan Kalyani]

Sir, thanks for sharing your valuable views. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

I forgot to mention 'Accounting Services' in my above reply. One of my clients is providing accounting services to the American companies located in America. He is preparing Balance Sheets (including Profit & Loss Account) for them. My client has hired three accountants in Delhi, Jaipur and Chandigarh.They prepare and my client who is C.A. gives the final touch. In the era of High Technology, one can provide so many services across the world. Owing to advancement in Science & Technology, one can earn money while sitting in India. Distance has vanished.

AI Summary

Trading of goods on the negative list means abroad to abroad trades are non taxable and limit CENVAT reversal obligations. Trading in goods is not a service and is within the negative list, so abroad-to-abroad trading is not taxable as a service. Cenvat credit reversal applies only where common input or input services provided from India are used in relation to that non-taxable trading; absent such common inputs, the value of abroad-to-abroad trading need not be included when calculating the Cenvat credit to be reversed.