Service Tax: DRAFT PLACE OF PROVISION OF SERVICES RULES, 2012.

Exhibit

DRAFT PLACE OF PROVISION OF SERVICES RULES, 2012

NOTIFICATION NO.__/2012-ST [GSR ___ (E), DATED __.__.2012]

In exercise of the powers conferred by sub-section (1) of section 66C and clause (hhh) of sub-section (2) of section 94 of the Finance Act, 1994 and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, number 9/2005-ST dated March 3, 2005 published in the Gazette of India Extraordinary, Part II, …vide number GSR……dated….., and the notification of the Government of India in the Ministry of Finance, Department of Revenue, number 11/2006-ST dated May 19, 2006 published in the Gazette of India Extraordinary, Part II, …vide number GSR……dated….., except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules for the purpose of determination of the place of provision of services, namely:-

1. Short title, extent and commencement.- (1) These rules may be called the Place of Provision of Services Rules, 2012.

(2) They shall come into force on___ day of…..2012.

2. Definitions.- In these rules, unless the context otherwise requires,-

(a) “Act” means the Finance Act, 1994 (32 of 1994);

(b) “account” means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account;

(c) “banking company” has the meaning assigned to it in clause (a) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934);

(d) “continuous journey” means a journey for which a single or more than one ticket or invoice is issued at the same time, either by one service provider or through one agent acting on behalf of more than one service provider, and which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issued;

(e) “financial institution” has the meaning assigned to it in clause (c) of section 45-I of the Reserve Bank of India Act,1934 (2 of 1934);

(f) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of service between two or more persons;

(g) “leg of journey” means a part of the journey that begins where passengers embark or disembark the conveyance, or where it is stopped to allow for its servicing or refueling, and ends where it is next stopped for any of those purposes;

(h) “location of the service provider” means-

(A). where the service provider has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained;

(B). where the service provider is not covered under sub-clause (A):

(i) the location of his business establishment; or

(ii) where the services are provided from a place other than the business establishment, that is to say, a fixed establishment elsewhere, the location of such establishment; or

(iii) where services are provided from more than one establishment, whether business or fixed, the establishment most directly concerned with the provision of the service; and

(iv) in the absence of such places, the usual place of residence of the service provider.

(i) “location of the service receiver” means:-

(A). where the service receiver has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained;

(B). where the service receiver is not covered under sub-clause (A):

(i) the location of his business establishment; or

(ii) where services are received at a place other than the business establishment, that is to say, a fixed establishment elsewhere, the location of such establishment; or

(iii) where services are received at more than one establishment, whether business or fixed, the establishment most directly concerned with the use of the service; and

(iv) in the absence of such places, the usual place of residence of the service receiver.

Explanation:-. For the purposes of clauses (h) and (i), “usual place of residence” in case of a body corporate means the place where it is incorporated or otherwise legally constituted.

(j) “means of transport” means any conveyance designed to transport goods or persons from one place to another;

(k) “non-banking financial company” means-

(i) a financial institution which is a company; or

(ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or

(iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette specify;

(l) “online information and database access or retrieval services” means providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;

(m) “person liable to pay tax” shall mean the person liable to pay service tax under section 68 of the Act or under sub-clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994.

(n) “provided” includes the expression “to be provided”;

(o) “received” includes the expression “to be received”;

(p) “registration” means the registration under rule 4 of the Service Tax Rules, 1994;

(q) words and expressions used in these rules and not defined, but defined in the Act, shall have the meanings respectively assigned to them in the Act.

3. Place of provision generally.- The place of provision of a service shall be the location of the service receiver:

Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the service provider.

4. Place of provision of performance based services.- The place of provision of following services shall be the location where the services are actually performed, namely:-

(a) services provided in respect of goods that are required to be made physically available by the service receiver to the service provider, in order to provide the service:

Provided that when such services are provided from a remote location by way of electronic means the place of provision shall be the location where goods are situated at the time of provision of service;

(b) services provided in conjunction with the supply of goods under another contract by the service provider;

(c) services provided entirely or predominantly, in the ordinary course of business, in the physical presence of an individual, represented either as the service receiver or a person acting on behalf of the receiver.

5. Place of provision of services relating to immovable property.- The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or coordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located.

6. Place of provision of services relating to events.- The place of provision of services provided by way of admission to, or organization of, a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to such admission, shall be the place where the event is actually held.

7. Place of provision of services provided at more than one location.-Where any service referred to in rules 4, 5, or 6 is provided at more than one location, including a location in the taxable territory, its place of provision shall be the location in the taxable territory where the greatest proportion of the service is provided.

8. Place of provision of services where provider and receiver are located in taxable territory.- Place of provision of a service, where the location of the service provider as well as that of the service receiver is in the taxable territory, shall be the location of the service receiver.

9. Place of provision of specified services.- The place of provision of following services shall be the location of the service provider:-

a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders;

b) Telecommunication services provided to subscribers;

c) Online information and database access or retrieval services;

d) Intermediary services;

e) Service consisting of hiring of means of transport, upto a period of one month.

10. Place of provision of goods transportation services.- The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods:

Provided that the place of provision of services of goods transportation agency shall be the location of the person liable to pay tax.

11. Place of provision of passenger transportation services.- The place of provision in respect of a passenger transportation service shall be the place where the passenger embarks on the conveyance for a continuous journey.

12. Place of provision of services provided on board a conveyance.- Place of provision of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey.

13. Powers to notify description of services or circumstances for certain purposes.- In order to prevent double taxation or non-taxation of the provision of a service, or for the uniform application of rules, the Central Government shall have the power to notify any description of service or circumstances in which the place of provision shall be the place of effective use and enjoyment of a service.

14. Order of application of rules.- Notwithstanding anything stated in any rule, where the provision of a service is, prima facie, determinable in terms of more than one rule, it shall be determined in accordance with the rule that occurs later among the rules that merit equal consideration.

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