Liability of service tax in case of service recepient from foreign

[Asked by Guest]

Query-1 Fact A body corporate engaged in the business of export of garments, takes the service of “Lab Testing” from the organization situated out side India and making payment in convertible foreign currency. Query: • Whether the body corporate is liable to pay service tax, on the payment to service provider. • In case the service provider, provides the service in India, where as bills are raised from outside India and payment is also made in convertible foreign currency. Then what about applicability service tax. Query-2 Fact A body corporates engaged in the business of export of garments, takes the services from a person residing outside India for procurement of order and coordinating with the buyer and payment is made in convertible foreign currency. Query: • Whether the body corporate is liable to pay service tax, on the payment to service provider.

AI Summary

Import of services liability: recipient must pay service tax when non resident provider supplies services to an Indian recipient.
An Indian recipient obtaining services from a non resident-such as overseas lab testing or order procurement-is liable to service tax as import of services, with the recipient treated as the provider when the service provider does not belong to India; applicability depends on whether the non resident has a business or fixed establishment supplying the service or a permanent address/usual residence abroad, per rule 2(1)(d)(iv) of the Service Tax Rules, 1994.