Service Tax on payment to commission agent in abroad

[Guest]

Hi...

My company has made an export through a commission agent. The commission agent is in abroad. I just wanted to know that whether service tax will be leviable or not. I am not registered for service tax.

Please reply...

[ROHAN THAKKAR]

Dear Sir,

The service tax will not required to be paid on the services provided by commission agent who is abroad for export  as Taxation of Services (Provided from Outside India and received in India) Rules, 2006 talks about services received in India. In this case, service of commission agent is not received in India but has been received in the foregin country.

Even if we treat as import of service, but the said service is in relation to Export Goods. Consequently, its credit can be utilised for payment of service tax on domestic services. Alternatively, its refund can also be obtained. 

Hence, service tax will not be required to be paid.

 

Regards,

Rohan Thakkar

9228720536

[YAGAY andSUN]

Kindly refer Notification No. 18/2009-ST dated 07-07-2011 in this regard.

[Dilip Darji]

Dear Sirs.

As per Section 66A, w.e.f 18/04/2006, if Service provider (your commission agent located outside India) (a) has establised a business in a country otherthan India (b)has a fixed establishment from which service is provided or to be provided, in a country other than India (c)has his permanent address in a country otherthan India (d)has his usual place of residence in a country otherthan India ........and the the service Receiver (you) (a0 has his place of Business in India (b)has his fixed establishment in India (c)has his permanent address in India (d) has his usual place of residence in India........such service shall be deemed to be a taxable service and such service shall be treated as if the service receiver had himself provided the service in india and shall be liable to service tax.

You (as Service Receiver)  are certainly covered in a coditions of Section 66 A, but your Commissioner agent (as a Service Provider) is not fulfilling the conditions of Section 66 A and therefore, service received by you, shall not be taxable.

[NEERAJ KUMAR, RANCHI]

What Mr Khatri has said is correct, if ur case is covered under Notification No. 18/2009-ST ,it is is exempted, But if it is  not then in my opinion you have to pay service tax on the amount. As of now even if the service has been provided in abroad, the receipient in India is liable to  pay service tax.. There are many cases under dispute on the matter. One case of M/s Ankit Exim is pending with the Hon'ble SC.

[sv bhasker]

I agree with Mr Pradeep Khatri. You have to pay tax first  as commission falls under BAS which falls under category (iii) of Rule 3 of provisions of Taxation of Services (Provided from outside India and received in India) Rules, 2006. You may have to  file refund  claimin terms  of Notification No. 18/2009 if you do not take credit of service tax paid.. 

[sv bhasker]

I am correcting myself. Exemption under 18/2009-ST is available only if the commission is less than 1% of FOB of goods exported. Further, it is not refund based exemption as I opined earlier. 

AI Summary

Import of service: recipient may be liable for service tax on foreign commission unless an export commission exemption applies. Whether payment to a foreign commission agent is taxable depends on place of receipt and supplier establishment: if the service is not received in India it is not taxable; if treated as import of service the Indian recipient may be liable unless the foreign provider meets the establishment criteria, and a specific exemption for small commission on exports removes tax liability where applicable, otherwise the recipient may pay tax and seek input credit or refund.