Export of Service through a Merchant Trader

[Asked by Guest]

We are a Merchant Exporter we exported a Machinery to Congo after buying it from local market.

After 4 months once the Machinery reached congo We sent a guy for installation of the same.

Now how do we do invoicing of such services exported through us. Local Service Provider raised Invoice in our name and we will raise invoice against Congo party.

Does the service will be chargeable of service tax?

Is there any Form like VAT-15 and H - Form for exemption of such export of services?

In which purpose code we have to receive payment of such export service?

[DR.MARIAPPAN GOVINDARAJAN]

The service receiver is in Congo, a non taxable territory and the service is also received in Congo, i.e., non taxable territory. Therefore no service tax is liable to be levied.

But Invoice by service provider is made in the name of Merchant Exporter. So how can he show that it is export service?

And how Merchant export will raise bill to congo and clear E-BRC for the same?

[YAGAY and SUN]

Please check our earlier reply on your query so raised.

[Ganeshan Kalyani]

I concur with the views of the experts. The service provided and received is outside the taxable territory. The provision of Finance Act is not applicable. Hence no service tax.

[Ganeshan Kalyani]

Please refer

Rule 4

:

Place of provision of performance based services

[Rajagopalan Ranganathan]

Sir,

Since the service provider has charged you service tax, you claim the refund of the same under rule 5 of Cenvat Credit Rules, 2004 since you cannot use the service tax paid by you for the reason that you are a merchant exporter and you cannot use the credit of the service tax paid.

[YAGAY and SUN]

If you are providing any taxable service then you can avail the CENVAT credit otherwise seek the refund route.

[Ganeshan Kalyani]

Refund provision seems to be useful here.

[YAGAY and SUN]

Facts and legal provisions both shall determine which route is feasible. Form H is a form prescribed under CST Act, 1956 for deemed exports.

[Kishan Barai]

Foreign Exchange earnings earned by services must to certified by CA, Quarterly returns of forex earnings with export promotion council.

Application has to be submitted online at DGFT site and you must have digital signature for filing the same.

You can also get benefits of SEIS if your preceding years income crosses 15,000$

[Kishan Barai]

It is very obvious that no service tax would be chargeable in your case.

AI Summary

Export of services outside taxable territory is not subject to service tax; refunds needed if tax was charged.
Services performed and received in a non taxable territory are not subject to service tax. If service tax was charged locally to the merchant exporter, the exporter cannot use CENVAT credit for export and should seek refund under the CENVAT Credit Rules. Place of provision rules for performance based services determine territoriality. Invoicing in the exporter's name does not by itself create taxability; exporters should maintain export invoicing, E BRC and chartered accountant certification of foreign exchange earnings. Form H for deemed domestic exports is not applicable to outward export of services.