Effective date - foreign commission

[neeraj garg]

we are manufacturer, exporter and paying foreign commission to agent in abroad for promoting export sales . what is effective date of applicability of Service tax on such commission

[sudhir V S]

Dear Mr. Garg, There are difference of opinion between may consultants and department in this area. According to my view it is applicable only form 19.04.2006 (the date of ammendment of sec 66A)

[Brijesh Verma]

I conform with the view of my learned brother who had posted his reply earlier. but we must at the same time not forget that w.e.f. 16-06-2005 the explanation was added below sec 65(105) which started with the words "For the removal of doubts....." Earlier this tax under reverse charge was imposed in 02 but since commission agent were out of the tax net till jul 04, therefore, 16-06-2005 date may even be another date which might be forced by the department.

AI Summary

Service tax on foreign commission applicability disputed between amendment date and earlier explanatory provision. Applicability of service tax on foreign commissions is disputed: one view treats the amendment to the charging provision (19.04.2006) as the operative effective date; another relies on the explanatory insertion to the taxable services definition (w.e.f. 16-06-2005) and earlier reverse charge introduction, which may lead the department to assert the earlier explanatory date as effective for taxing such commissions.