Service Tax-Registration

[Dhirendra Srivastava]

Dear All My query relates to Registration under section 69 of  Service tax rule 1994. If a Foreign Company is having a PE in India and it provides service to some other unrelated Indian Company. Invoice will no where mentioned the name of PE. It will be raised by the Foreign Company.PE is no where involved in the provision of services Query: Does Foreign Company require to be registered under Service Tax.

registeration Eorm

Form ST-1 Required For New Regestrition

[DEV KUMAR KOTHARI]

What is service, where it is rendered , what is relationship between service provider and service receiver, what sort of consideration is passed for the service etc. are fact to be examined.

Not mentioning address of P/E is not a ground to seek exemption.

The moot question is from where services are rendered. If services are rendered in India, ST regn. is required by service providers, even if there is no P/E. If services are rendered outside India then they may not be taxable.

Check, whether customer is liable to pay ST on services imported 

[Dhirendra Srivastava]

Dear Mr. Dev Kothari

Thanks for the reply

But the main essential of Import of service is that service should be provided from outside India and the service reciever should be in India.

Only then Reverse Charge mechanism applies.

My question was that if Reverse Charge Mechanism applies, in that case does the Service provider required Registration who is having a Branch in India even though the branch had nothing to do with the provision of services.

[Ramanujam Varadarajan]

In the position explained in your query, it is only the Indian company receiving the service in India would require to pay service tax under reverse charge. 

For this purpose, Foreign company is not required to registr and there is no requirement on PE to pay tax in such a case.

[Brijesh Verma]

Dear Learned Members,

The basic aspect that needs to be seen here is that the condition regarding establishment of PE by a foreign person in India becomes absolutely important only in case of 'Export of Service' under the proviso 1 to Rule 3(1)(iii). In that case if the foreign service receiver has a PE in India then the service will not be treated as export if the order was made by its Indian PE. 

Now in case on Import of service, if we see the rules, we don't find any such stipulation. So we can safely conclude that since in your case, though the foreign service provider has a PE in India but the service provision as well as billing thereof is done from foreign, hence the same qualifies as a valid 'Import of Service' and the service receiver is liable under reverse charge mechanism.

AI Summary

Reverse charge mechanism: Indian recipient liable for imported services even if foreign supplier has an in country PE.
When services are provided from outside India by a foreign company but received in India, the Indian recipient is liable under the Reverse Charge scheme; the foreign provider's permanent establishment in India does not itself make the provider liable for registration or tax where the PE is not involved and the services are rendered and invoiced from abroad.