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TMI BlogService Tax on Import of Service in India Section 66AX X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax on Import of Service in India Section 66A X X X X Extracts X X X X X X X X Extracts X X X X ..... on Scope and dimensions of Import of Service on which recipient of services is liable to pay service tax in accordance with Section 66A of Chapter V of Finance Act, 1994, read with Rules [Taxation of Services (Taxation of Services (Provided from Outside India and received in India) Rules, 2006, (hereinafter referred as Import Rules)]. In this article we shall not discuss the purpose and login be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hind classification of services into three categories in Rule 3 of Import Rules, but we shall discuss the scope and depth of Section 66A itself. Sub section (2) of section 66A read as: "Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate persons for the purposes of this section. Explanation 1. A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2.Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted." The provisions of Sub Section 2 of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 66A are applicable to "Service Provider" as well as "Recipient of Such Services" Example 1 For an example XYZ Ltd. a company incorporated in India is having its branch office (P/E) in USA. Now this P/E of XYZ Ltd. receives some services from a service provider situated in USA itself. In these circumstances, a question is bound to arisen that whether XYZ Ltd. is liable to pay service tax in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia as per the provisions of Section 66A? In terms of provisions of Sub-section 2 of section 66A, the P/E of XYZ Ltd. in USA and XYZ Ltd. in India both shall be treated as separate persons. Therefore, the P/E of XYZ Ltd. is to be treated as person situated out of India. Accordingly the XYZ Ltd. shall not be liable to pay any service tax on services received by its P/E situated in USA. Further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is situation will not change merely because, payment is booked in the accounts of XYZ Ltd. in India. Example 2 If we take another example where ABC Ltd. incorporated in India does not have any office (P/E) in England. Now, ABC Ltd. receives services of "Management Consultancy" from a firm situated in England for a project proposed to be established in England or elsewhere. In this case, ABC Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . would liable to pay service tax in the capacity of recipient of services in accordance with Section 66A read with Rules.
Similarly, there may be various permutation / combinations in which service tax liability is to be determined after considering the statutory provisions carefully.
(Also see: Ready Reckoner on "Import of Services") X X X X Extracts X X X X X X X X Extracts X X X X ..... erts, professionals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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