Sevice tax liability - aircraft operator and freight forwarder

[Guest]

When goods are imported to India & the airfrieght charges paid by the freight forwarder and claimed from the customer & this service is rendered outside India and received in India. Will such services are liable to service tax under aircraft operator and freight forwarder is liable to service tax under rule 3(ii) specified in sub-clauses. Pls clarify.

Rgd

Anantha krishna T

[Surender Gupta]

Your service is falling under the second category of Import of Services Rules, 2006 under clause 3(ii) as partly performed in India. From the facts mentioned in the query, it seems that this service is taxable as import of services.

[Madhukar N Hiregange]

The receiver of the servcies may not be liable as the freight forwarder has a nexus with the service provider otuside India. Agreement with teh FF may be important.

AI Summary

Import of services rules: air freight arranged abroad may be taxable when partly performed and received in India. Liability under the Import of Services Rules arises where air freight services procured abroad are partly performed in India and received in India, rendering them taxable as imported services; allocation of liability depends on the contractual nexus between the freight forwarder, foreign provider and the domestic receiver, with contractual terms determinative for tax incidence.