Commission Agent, Service Tax

[DEEPAK SHARMA]

DEAR SIR,

KINDLY RESOLVE THE ISSUE

I AM EXPORTER OF GOODS THROUGH COMMISSION AGENT, MY COMMISSION AGENT ESTABLISHED THEIR OFFICE AT JAMMU. GOODS HAS BEEN DIRECTLY EXPORTED BY US TO DUBAI. LATER ON WE HAVE PAID COMMISSION TO OUR COMMISSION AGENT. PROOF OF EXPORT ARE ACCEPTED. DEPT. SAYING THE EXPORTER IS LEVIABLE SERVICE TAX ON COMMISSION PAID TO COMMISSION AGENT. WHEREAS SERVICE RECEIVED FROM COMMISSION AGENT IS IN OR IN RELATION OF EXPORT OF GOODS.

WE HAVE PAID COMM AGENT IN INR

THERE IS REFFERENCE OF COMM AGENT ON EXPORT DOCS.

COMM AGENT RAISD BILL US WITH THE REFFERENCE OF FOREIGN BUYER.

PLEASE GUIDE US EITHER THE EXPORTER IS REQUIRE TO PAY SERVICE TAX?

Posts / Replies

[PAWAN KUMAR]

Dear Sir,

As per my view, service performed in India by the commission agent located in the non-taxable teritorry. The service receiver belongs to taxable teritorry. In such case, service receiver is liable for service tax as per s.no.10 of notification No.30/2012-ST dated 20.06.2012. In your case, exporter is liable for service tax on commission paid.

[Pradeep Khatri]

Dear Pawan,

Please review your reply in context with Rule 9 of the POPs with the changed definition of Intermediary services.

Regards,

Neelam Taneja

(YAGAY and SUN)

(Management, Business and Indirect Tax Consultants)

[PAWAN KUMAR]

Dear Pradeep Ji,

As per recent changes in Intermediatery in PPOS Rules from 01.10.2014, the place of provision of service would be locaiton of commission agent. In the instant case, service being performed in India, therefore liable for service tax. Now who will be liable for service tax. Service provider location is non-taxable teritorry but service receiver location is taxable teritorry. Therefore service receiver is liable for service tax.

[JYOTI DEORA]

I am agree with view of Mr.pawan kumar.

[DEEPAK SHARMA]

Sir it is saying that service received from non taxable territory in respect of export of goods only

[PAWAN KUMAR]

Yes,

As per recent changes, this service being received from the non-taxable teritorry.

[Bhuwan Joshi]

As per rule 9, the Place of provision of service in case of intermediary services shall be the location of service provider.

Since service provider i.e. the commission agent is located in J and K which is outside the taxable territory hence no service tax is payable at all.

[Naveed S]

From 1^st October 2014, As per Rule 9 of POP Rules 2012, Place of provision is location of service provider. Therefore, Commission Paid for facilitating sale of goods exported is not taxable service as J and K falls under non taxable territory.

However, department view is also correct as it is liable for service tax upto 31.09.2014.

[PAWAN KUMAR]

Dear Sir,

As per my view, If the service being performed completely in JandK i.e. service provider and service receiver both in JandK, service is not taxable.

If the service provider is located in JandK but the service receiver is outside JandK, then service receiver is liable for service tax as per S.No.10 of notification No.30/2012-ST dated 20.06.2012.

In the instant case, the service provider is located at JandK, in non-taxable teritorry. Kindly ensure the location of service receiver.

[DEEPAK SHARMA]

Again I am saying that service received in taxable territory but for the purpose of export of goods

[PAWAN KUMAR]

Dear Sir,

Service tax is liable even if used for export of goods. The service is not being exported in the instant case. Goods being exported.

As the liability is on the receiver, there is an option to claim the exemption subject to fulfillment of condition of Notification No.42/2012-ST dated 20.06.2012.

[Bhuwan Joshi]

I again stand by reply submitted by me and Mr. Naveed S.

This is because as per Section 66 B, service tax liability is attracted only and only when the service is provided in taxable territory. Place of provision of service is determined by Place of Provision of Service Rules. The present case clearly fall Rule 9 of POPS Rules where place of provision of service is Location of Service Provider (The Broker).

As far as reverse charge mechanism is concerned it is only a method of collection of service tax. It will be attracted only after it is decided that service is taxable.If service is not taxable, reverse charge mechanism will not be attracted.

Please note that the law cited above is applicable w e f 1st October 2014. If your case pertain to prior period then department view is correct.

[PAWAN KUMAR]

Dear Bhuwan Ji,

Please guide/clarify on the following as per my understanding:

1.Service provider and service receiver both from JandK. As per my view service being consumed in JandK therefore no service tax is payable.

2.Service provider from JandK and service receiver from U.P. Since place of provision of service is location of service provider. No tax liability for service provider. However under RCM S.No.10 of notificaiton No.30/2012-ST dated 20.06.2012, service tax would be liable for service receiver.

3.Service provider from U.P. and service receiver in JandK. Service provider is liable for service tax.

[Bhuwan Joshi]

Dear Pawan Ji,

Your point no. 1 and 3 are OK.

As regards point no. 2, I would submit as under.

As per section 66 B, which is charging section, service tax is levied on services provided in taxable territory provided by one person to another person.

"Taxable Service" is defined under Section 65 B (51) " Any service on which service tax is leviable under section 66 B of the Act"

As per Sl. No. 10 of Notification No. 30/2012 the wording is ...in respect of any taxable services provided or ..........

Since place of provision of service as per POPS is J and K which is not a taxable territory hence it is not a "Taxable Service" hence notification no. 30/2012 has no implication in the present case.

A service has to pass test of being Taxable Service to attract notification no. 30/2012

Hope my view point is clear.

J and K is not a taxable territory hence service tax not attracted in the light of above sections.

[PAWAN KUMAR]

Dear Bhuwan Ji,

Ok . Now my point is clear.