.Clarification on Notification14/2014-ST-Reg.

[RAM SHARMA]

Dear Sir,

 

One of our consignment Agent is located in Jammu & Kashmir selling our goods on commision basis. (Non Taxable Territory).

 

Secondly, We have paid foreign expenditor regarding Advertisement/Exebition, Fees & subscription, Legal & Professional and Training Expenses etc.

 

Whether we are liable to pay service tax under reverse charges on above both cases and can cenvat taken thereon. (Notification no. 14/2014-ST, dated 11.07.2014) Please clarify.

 

Thanks & Regards

[Ganeshan Kalyani]

Refer point no.10 of Notification no.30/2012-ST dated 20.06.2012 .

[RAM SHARMA]

Dear Sir,

since agent being service provider is in J&K, the place of provision is outside taxable territory (Rule 9) and not subject to service tax and hence, no liability under RCM. Is this rule is right ? Please clarify.

Thanks

[KASTURI SETHI]

I agree with the views of Sh.Ganeshan Kalyani, an expert. RCM is applicable in both instances. If you consignment agent (located in J & K) provides service in J & K, then it is not taxable. If service is provided outside J & K, RCM is applicable. In the second instance, RCM is also applicable.

[RAM SHARMA]

Dear Sir,

Amendments w.e.f. 01.10.2014 (vide Notification No. 14/2014-ST dated 11.07.2014)

1. The definition of intermediary is being amended to include the intermediary of goods in its scope. Accordingly, with effect from 1.10.2014, an intermediary of goods, such as a commission agent or consignment agent shall be covered under rule 9(c) of the Place of Supply of Services Rules.

The definition of intermediary as defined under Rule 2(f) of the Place of Provision of Services Rules, 2012 has been amended vide Notification No. 14/2014-ST, dated 11.07.2014. This notification shall come into force from 01.10.2014. By virtue of this amendment, the scope of rule 9 has been widened and will cover supply of goods also. While prior to such amendment, only agent or intermediary who is engaged for providing of services are covered under the definition, w.e.f. 01.10.2014 any broker, agent or any other person whatever name called arranges or facilitates supply of goods between two or more persons shall also be covered under the scope of 'intermediary'. The amended definition is as follows –

"(f) 'intermediary' means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account"

Accordingly, w.e.f. 01.10.2014 any intermediary who is engaged in supply of goods, such as a commission agent or consignment agent shall also be covered under the scope of term 'intermediary'. In case of intermediary services for supply of goods, place of provision of service shall be the location of service provider, as stipulated in Rule 9(c) of the POP Rules, 2012 instead of Rule 3 thereof.

As per above mention amendment, J&K is a non taxable territory hence the liability of service tax is shifted from service receiver to service provider. Please express your views in this regard.

Thanks

AI Summary

Place of Supply rules: intermediary classification now covers goods intermediaries, shifting reverse charge application based on provider location.
Notification amending the Place of Provision Rules expands the definition of intermediary to include intermediaries of goods, so that intermediary services for supply of goods fall under Rule 9(c) and the place of provision is the location of the service provider. This change means commission or consignment agents are treated as intermediaries and the territorial determination for application of the reverse charge mechanism shifts to the agent's location; separate reverse charge considerations apply for payments to foreign service providers and raise questions on cenvat eligibility.