It was reported in certain sections of the Press that tax officials had raised tax demand in respect of export of IT/IT enabled services provided to clients abroad and that this had been done on the basis of place of supply rules in respect of these services which were apparently provided in India and therefore were liable to be taxed.

In a subsequent development, the Commissioner (Appeals) set aside the Orders of the lower adjudicating authority where refund was disallowed and has also upheld the orders where refund had been granted. Thus, the apprehensions expressed in those sections of the Press about the negative effects on the software industry are without basis.

Place of supply rules: tax demands on exported IT services addressed, appellate review set aside disallowances and sustained refunds. Place of supply rules were applied to IT/IT enabled services to treat exports as supplied in India and taxed, but appellate review set aside orders disallowing refunds and sustained orders granting refunds, removing the basis for reported apprehensions.