Liability of service tax under reverse charge

[Sanjeev Sharma]

An Indian Company subscribes to a foreign journal ( e journal)in electronic mode through an indian Agent. It receives password direct from foreign publisher and through which it can access and download the E journal. Payments are made to agent in INR. Agent, in turn, remits the payment to foreign publisher in foreign currency after deducting and retaining his commission. Query : 1. Is Indian company or agent liable for service tax under reverse charge under import of taxable services under Online database access or Retrieval Or Information Technology or under any other taxable Services ?? who will be liable ? 2.Is agent covered under Export of services for his commission income ?

[Mukesh Kumar]

The activity in question appears to be in the nature of import of service and liable to service tax. However, you have to decide that you is the receiver of inormation from abroad. The Company, The agent on his own behlaf or The agent on behlaf of the company. In first and third situation, the comapany is liable for service tax. On the other side, the agent is liable for service tax. The amount received by the agent as commission, can not be treated as export since he is acting on behlaf of the Indian Party and getting the commission in INR.

AI Summary

Reverse charge liability: recipient of imported electronic information services bears service tax unless agent acts on its own behalf. Import of foreign electronic journal access is an import of service chargeable under reverse charge; the Indian company is liable where it is the recipient or where the agent acts on its behalf, but the agent is liable if it procures the service for itself. The agent's commission paid in domestic currency and earned while acting on behalf of the Indian company is not to be treated as export of services and remains taxable.