SERVICE TAX ON COMMISSION ON HIGH SEA SALES INVOICE

[Rajeev Khulbe]

GOOD AFTERNOON TO ALL MY EXPERT,

I NEED SOME ADVICE REGARDING SERVICE TAX ON COMMISSION. SIR IS SERVICE TAX APPLICABLE ON HIGH SEA SALES INVOICE. FLAT RATE 15 %

[Rajagopalan Ranganathan]

Sir,

The area beyond 200 nautical miles from the shore of a country is called 'High Sea'. Therefore any sale taking place before goods are cleared from customs is sale 'in the course of import' and is exempt from sales tax. "high sea" sale can be treated as taking place in non-taxable territory. However if the purchaser is within taxable territory, then he is liable to pay service tax on sales commission paid on high sea sales under reverse charge mechanism just like an importer. This is my opinion.

[YAGAY andSUN]

There is no such thing Commission in High Sea Sales. If it being charged then it should be disclosed to the customs authorities to levy of Customs Duty.

[Venkataprasad Pasupuleti]

It is not commission, it is only the margin received for doing sale & purchase, nothing but trading of goods. Therefore service tax is not liable on such margin

[KASTURI SETHI]

I support the views of M/s.YAGAY AND SUN, Sirs and Sh.Venkata Prasad, an expert.

[Ganeshan Kalyani]

Enriching discussion, in fact. Thanks.

[YAGAY andSUN]

CIRCULAR NO. 32/2004-Cus, Dated: May 11, 2004

[YAGAY andSUN]

Now, it is enriching discussion.

[Rajeev Khulbe]

THANKS FOR YOUR REPLY,

BUT SIR WHO WILL PAID SERVICE TAX ON COMMISSION . SELLER OR PURCHASER .

AI Summary

Service tax on commission may fall on purchaser under reverse charge when commission relates to high sea sale. Whether service tax applies to commission on a high sea sale depends on characterisation: high sea sales can be treated as outside taxable territory for sales tax, but if the purchaser is in the taxable territory the purchaser may be liable for service tax on commission under the reverse charge mechanism. The distinction between a commission service and a trading margin, and customs disclosure obligations, affect the tax treatment.