Whether this service can be said as exported or not?
C..a......STUDENT
(Querist) 14 November 2013
This query is : Resolved
As per Rule 6A of Service Tax Rules, as inserted w.e.f. 1-7-2012, a service shall be treated as export of service when all following conditions are satisfied –
(a) the provider of service is located in the taxable territory
(b) the recipient of service is located outside India
(c) the service is not in negative list of services
(d) the place of provision of the service is outside India
(e) the payment for such service has been received by the provider of service in convertible foreign exchange, and
(f) Service provider and receiver are not merely branches of same person.
All points are satisfied except pt (e) which is doubtful since the assessee is receiving the payment from its USA based client in US dollars but due to some complexities was unable to get in the money straight into India without registering itself there as a co. So, as an alternative, it used the services of an entity in USA to get the currency converted into Rupees and send the proceeds to India.
Will Service Tax provisions be applicable .i.e. will it be considered a export of service or not?
Please reply.
M V Gupta
(Expert) 15 November 2013
A plain reading of the Rule 6A quoted by you (presume that it is quoted verbatim without omitting any portion of the Rule) indicates that if the service is rendered to a concern's own branch overseas, then the tax is not applicable. From the facts narrated by u it appears that service was rendered to a client abroad through ur representatives there. Hence in my view the transaction will attract ST.
C..a......STUDENT
(Querist) 16 November 2013
No sir, our representative abroad is just receiving our money from our client and remitting to us in India after converting it into Rs.....The entire service to the US based client is rendered by the Indian co. from a call center set up in India only.
M V Gupta
(Expert) 16 November 2013
U are confirming my presumption that the service was rendered to ur client in the USA and as such u should have received the charges directly from ur client in US $s. Instead ur representative in the USA received the amount in $s in the USA and remitted the same to ur account in India. This does not save u from ur liability to pay the ST.
C..a......STUDENT
(Querist) 16 November 2013
But sir, the Indian co. could not have received its money from the US client directly because:
1) the Indian co. could not open a bank a/c in USA without registering it itself there.
2) the US based client was unwilling to get into the stringent regulations of RBI.
Moreover, sir the representative is just acting as an collecting agent.
Sir, as per Rule 6A of Place of Provision Rules, 2012 all clauses are definitely satisfied.....except that of clause (e) which states proceeds must be realized in convertible foreign exchange.....
My point is that if the money was converted in Rs. in USA by our agent and then remitted to the Indian Co., then the condition be considered as satisfied or not?
prabhakar singh
(Expert) 16 November 2013
To me your's would not be treated export of service when you did not bring usd ($) in the country.No foreign exchange earned ,no export done.
C..a......STUDENT
(Querist) 16 November 2013
But Prabhakar Sir, can a service provider receive its proceeds directly in India in foreign currency?
prabhakar singh
(Expert) 16 November 2013
Yes! In it's bank account at India and bank would furnish details to RBI.
C..a......STUDENT
(Querist) 16 November 2013
You mean that if $50000 is to be received, then $50000 will be credited in the Bank Account in India maintained in Rupees?
C..a......STUDENT
(Querist) 16 November 2013
or a separate Foreign Currency Bank A/c be maintained in an Indian Bank?
prabhakar singh
(Expert) 16 November 2013
The last one is the right option.
C..a......STUDENT
(Querist) 16 November 2013
Sir can you help me in these two problems:
1) http://www.lawyersclubindia.com/experts/Applicability-of-s-tax-on-h-p-interest-for-individual-434571.asp#.Uodqxid36GY
2) http://www.lawyersclubindia.com/experts/Applicability-of-s-tax-on-on-these-online-services-434956.asp#.Uodq0Cd36GY
