Service tax leviability on Testing and analysis charges recovered from Foreign buyers.

[samiuddin ansari]

Hello Good morning,

My query is whether service tax is chargeable on income received from Foreign parties in Euro for the processing charges i.e Testing and analysis charges made on goods supplied to foreign supplier. Since, services were performed in India i.e. taxable territory and customer situated in foreign territory i.e non-taxable territory. whether service tax is leviable on such income. As CERA audit team is emphasising for payment of service tax alongwith interest and penalty. We solict your valuable guidance in to the matter at the earliest.

Thanks with regard.

AI Summary

Place of provision rules determine service tax liability for testing and analysis performed in India, despite payments from foreign buyers.
Whether service tax applies to testing and analysis charges from foreign buyers depends on the place of provision: under Rule 4(a) of the Place of Provision Rules, services performed in India have their place of provision in taxable territory and attract service tax, whereas an alternative view treats such testing and analysis as an input service for export of goods and not subject to service tax.