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TMI BlogApplicability of service tax under reverse chargeX X X X Extracts X X X X X X X X Extracts X X X X ..... Applicability of service tax under reverse charge X X X X Extracts X X X X X X X X Extracts X X X X ..... ) where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained; (b) where the recipient of service is not covered under sub-clause (a): (i) the location of his business establishment; or (ii) where services are used 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 used 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 recipient of service. Explanation:-. For the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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. Explanation 2:-. For the purpose of clause (i), in the case of telecommunication service, the usual place of residence shall be the billing address. Since X being an Indian company . Place of provisio of Service would be in India and X would be liable for payment of service Tax as receipent under reverse charge mechanism. Reply By SANJIV KOTHARI: The Reply: Dear Mr Vadhel Here the services are in the nature of civil construction and erection & commissioning so rule 4 i.e performance based services would apply. According services are not taxable under reverse charges as performed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India. This my view if think otherwise please comment. Regards Sanjiv Reply By dipsang vadhel: The Reply: In case of performance based service,The essential characteristic of a service is that the goods temporarily come into the physical possession or control of the service provider, and without this happening, the service cannot be rendered. Hence, it is important to consider the service agreement entered into between parties. At times, Erection & commissioning at project site amy not require temporarily the physical possession or control of good by the service provider, and without this happening, the service is being rendered, in that case Rule 3 will apply. My this I mean Services in nature of Basic or detailed engineering whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re consultants works mostly on Engineering ( may be mechanical, Civil or other discipline) description and provide Techanical details (basic or detailed engineering) and/or trouble shooting assistance without temporarily physical possession or control of good by the service provider. On this premises and assumption , I was of the opinion that Rule3 will apply and ST liability of X under revese charge mechanism. However, if after persuing service agreement entered into between parties, if it can be made out that the goods temporarily come into the physical possession or control of the service provider, and without this happening, the service cannot be rendered. , I agree that rule 4 i.e performance based services would apply. In that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of provision of services shall be the location where the services are actually performed and in present case, out of India and accordingly No ST. Thus key of Rule 4 is physiacal need of making avilable the goods physiaclly for performance of service to happen. with warm regards, Reply By SANJIV KOTHARI: The Reply: Dear Mr Vadhel Thanks for providing valuable input on the issue. Regards Sanjiv Reply By sanjeev bajaj: The Reply: As stated earlier and facts disclosed, there are many points which needs to be considered :- 1. As the service is related to civil construction, erection & commissioning and suppose to be related to immovable property, it falls under Rule 5 of the 'Place of Provision of Services. The immovable prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty is situated outside the taxable territory. Further erection & commissioning seems to be directly related to immovable property. 2. With respect to Rule 3 read with clause (I) of Rule 8 of this rules, it is important to note and analyse sub-clause (a). " Where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained" Here, I suppose , the premises has not been registered whether individually or centralized. Hence, not covered. Further, if we read clause (I) and clause (ii) of the same, the project located outside India where services has been received is being operated thru branch or agency or representational office as explained in Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation 4 of clause (44) of Section 65B of the Finance Act, 1994, then the location of the service receiver is outside the taxable territory. However, the later Rule 5 applies to the facts and non taxable. This is my personal views and any thing contrary may be forwarded and discussed. Reply By vijay kumar: The Reply: The period involved is crucial, which is not mentioned. After 1.7.2012, in terms of the definition of Service, if it is rendered outside taxable territory ie. outside India, it is not taxable except when both the service provider and service receiver are located in India. Since it is stated that the project is located outside India and service provider is also outside India, the question of taxability post0-1.7.2012 does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arise. However, prior to this period, if we look at the Import of service rules, 2006 which are effective 18.4.2006, property based services fall under Rule 3(i) by which also, I think there is no taxability since the project is executed outside India. Plz inform facts. X X X X Extracts X X X X X X X X Extracts X X X X
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