Place of Provision of Services Rules

Place of Provision of Service Rules, 2012 were provided in the principal Notification No. 28/2012 – Service Tax, dated 20th June, 2012 vide number G.S.R. 470 (E), dated 20th June, 2012. The same are now amended vide this Notification No. 14/2014. These amendments are going to bring a major shift on the liability of service tax in respect of some services.
Commission Agent service: Under the amended rules, commission agent is covered under Rule 9(c) of the POP Rules, which means, the place of provision of service will 89 be the location of service provider. So, if an overseas agent provides commission agent service to an Indian exporter, it will not attract reverse charge as the location of service provider is in non-taxable territory. Consequently, if any commission agent renders service in India for any foreign goods, the commission agent is liable to pay service tax, even though he may receive the commission in foreign exchange.

Hiring of Aircrafts or Vessels: Rule 9(d) of the POP Rules, 2012 has been amended to exclude Aircrafts and Vessels from the scope of this rule. Before this amendment, Aircrafts or Vessels taken or hire from abroad up to a period of one month did not attract service tax under reverse charge. But, now that these two modes of transport are excluded from Rule 9(d), the place of provision is the location of service recipient as per Rule 3. Therefore, from 1st October 2014, if Aircraft or Vessel is taken on hire from a non-taxable territory for a period up to one month, it attracts service tax under reverse charge.