Service Tax on Service provided out of India, but recd from person located outside India

[Milan Gandhi]

I have following 2 Querries related to Service Tax. Request to please guide in the matter :

1. One of my client who is registered under the category of Business Exh Services. He bills to the Indian client for the exhibition to be held out of India. He charges S T on the invoice and pays to the Dept. Now on the other hand, my client engages the party not having any business establishment in India ( Located out of Indian Territory ) for stall fabrication and pays to him.

Querry : Whether Service Tax is to be paid on RCM for payment to foreign party ?

2. The Service Tax Audit is already completed till 31.03.2015 and at present, S T Audit is under process for 2015-16.

Querry : Whether, Recovery for previous years based on above points can be done or not ?

Reply with relevant notifications solicited ASAP.

[KASTURI SETHI]

Sh.Gandhi Ji,

My views are as under:-

It is a fact that ultimately the exhibition services have been consumed out of India. Your client's activity i.e. Exhibition is specifically covered under Rule 6 of Place of Provision Services Rule, 2012 inasmuch as service is consumed out of India and the place of provision is the place where the event is actually held. Consumption of service in non-taxable territory is basic condition for treating service as non-taxable. Arrangement of payment by your client via foreigner does not disturb the status of consumption of service in a foreign country/non-taxable territory.

Query no. 2 No.

Query No.3 No. There are case laws where it has been held that the extended period cannot be invoked involving the period in which audit has been conducted. On case is of Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-I Versus MTR FOODS LIMITED - 2012 (10) TMI 165 - KARNATAKA HIGH COURT year 2011 and Other is of Mumbai High Court in the case of Rajkumar Forge Ltd in 2010 (8) TMI 796 - BOMBAY HIGH COURT and one case by CESTAT decided in September, 2016 Sunil Forging And Steel Ind., Shri Benu Ramesh Agarwal Versus Commissioner of Central Excise, Belapur- 2016 (1) TMI 386 - CESTAT MUMBAI on the basis of these judgments.

 

 

[Ganeshan Kalyani]

I would like to reproduce the rule 6 for reference :

Place of provision of services relating to events.-

06. The place of provision of services provided by way of admission to, or organization of, a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to such admission, shall be the place where the event is actually held.

AI Summary

Place of Provision of Services: services consumed abroad for events are non taxable in India, payment route irrelevant. Services for an exhibition held outside India are consumed outside India and fall within Rule 6 of the Place of Provision of Services Rules, 2012, making them non-taxable in India; payment routed through or made to a foreign supplier without an Indian establishment does not change that tax status. Consequently, such procurement for stall fabrication at an overseas event is not subject to reverse charge in India. Recovery of service tax for periods already audited up to 31.03.2015 cannot be pursued by invoking the extended limitation where audit has been completed.