Service tax liability on Training fee paid to Oversea vendor

[Guest]

Dear Sir,

We are a manufacturer and our two employees are went to japan and took training for this training vendor had charged us training fee, room charges for training and some other charges for material used by our employee during this training we paid all this charges to japan Vendors My question is id this transaction attract to service tax under Reverse Charge Mechanism.

Because Service provider is non taxable territory that is Japan and place of of service provide is also Japan our employees are went there so is any service tax liability for service receiver.

If Yes than on which amount on total amount including room rent and other charges or only on training fee.

Regards

[Rajagopalan Ranganathan]

Sir,

Since the service is provided in Japan which is a non-taxable territory no service tax is payable. Rule 4 (b) of Place of Provision of Services Rules, 2012 provides that "the place of provision of services shall be the location where the services are actually performed, namely,services provided to an individual, represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the receiver, with the provider for the provision of the service." since your case your employees are deputed to Japan for receiving the service on behalf of your company and the service provided in non-taxable territory no service tax is payable by you.

AI Summary

Place of provision of services: training physically received abroad is outside taxable territory, so no service tax applies. The place of provision determines taxability: under Rule 4(b) of the Place of Provision of Services Rules, 2012, services requiring the physical presence of the recipient are provided where they are performed; because the training was performed in Japan (a non taxable territory) by an overseas vendor, no Indian service tax is payable on the training or related charges under the reverse charge mechanism.