Treatment of Service Receiver and Service Provider

[Guest]

If an Indian Company charteres a Foreign airlines (does not have a permanent establishment in India) to Import goods on behalf of another Indian company, a) Who will be treated as a Service Receiver and Service Provider.

[Surender Gupta]

In this case, a small change in the facts would change the entire situation. However apparently, the Indian Company who enters into agreement with and makes payment to the foreign airline shall be liable to pay service tax.

[Guest]

Indian company who imports goods on behalf of another indian company should be treated as Service Provider as per Service Tax Act (Import of Services). Further no input credit would be allowed against the payment made by the indian company chartering the foreign airlines. Further when indian company raises the bill on the main company on who;s behalf the goods have been imported, the service tax at the normal rate should be charged and paid to the govt. i.e that company would be paying twice (i.e as service receiver and secondly as service provider).

AI Summary

Indian Company Faces Dual Service Tax on Chartering Foreign Airline for Imports; No Input Credit Allowed An Indian company chartering a foreign airline without a permanent establishment in India to import goods on behalf of another Indian company raises questions about service tax obligations. One perspective suggests that the Indian company paying the foreign airline is responsible for the service tax. Another view posits that the importing Indian company acts as the service provider, thus liable for service tax both when chartering the airline and when billing the main company for the imported goods, effectively paying the tax twice. No input credit is allowed for the payment to the foreign airline.