By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Place of Provision of Service Rules, 2012-marketing and sales in India to a firm in China ans USA – place of provision is location of service receiver – Rule 3 applicable – Export.
Facts:
The applicant, an Indian company (wholly-owned subsidiary of a Singapore company) with the objective of strengthening and enhancing sales of the products of Tandus USA and Tandus China to its Indian customers against consideration receivable in freely convertible foreign exchange, agreed to provide services of marketing and promotion of products to Indian service recipients. The services also included demonstration of products, communication with customers, management of dealer accounts, coordination with representatives of customers, etc. The applicant sought advance ruling on the following questions:
• What would be the place of provision of the marketing and support services provided in India by the company to Tandus US and Tandus China in terms of the Place of Provision of Service Rules 2012 (introduced vide Notification No. 28/2012–S.T. dated 20-06-2012)?
• Whether the said services would also qualify as export of taxable services under Rule 6A of the Service Tax Rules, 1994?
Held:
Considering the case of service proposed to be provided from Indian territory to a business entity located outside India and referring to Circular No.111/5/2009 dated 24-02-2009, it was observed that the benefit of service accrued outside India. Accordingly, in terms of the applicable Place of Provision of Services Rules, 2012, the Hon. Authority held that the service so provided by Tandus India was covered under the default Rule 3 which stipulated that the place of provision shall be the location of the service recipient i.e., Tandus USA and Tandus China and thus service was deemed to be provided in a non-taxable territory. Further, referring to Rule 6A of the Service Tax Rules, 1994, the Hon. Authority held that since the applicant satisfied all the conditions of the said Rule, the services so provided would tantamount to export.
