Service Tax on overseas Trade Fairs/ Exhibition under ‘Business Exhibition Services' - Board Clarifies
AS per a letter written by the Confederation of Indian Industry, organizing a business exhibition involves three activities viz
++ hiring of premises outside India,
++ arranging/ coordinating installation of stalls and
++ renting of stalls to Indian Exhibitors.
The first two activities are the services received by CII from outside India and third activity is service provided by CII within India.
So the Board has clarified that the third activity is service provided by CII to Indian Exhibitors to participate in exhibition held abroad and does not qualify as export as the consideration is not received by CII in convertible foreign currency as provided under Rule 3(2)(b) of the Export of Services Rules, 2005.
Board further clarifies that as the notification No. 5/2011-ST dated 01.03.2011 exempting Business Exhibition Service when provided by an organiser of business exhibition for holding a business exhibition outside India has been issued, the scope of this clarification will be limited till 28.02.2011.
The issue is not that simple:
In DDT 1602 – 05 05 2011, we had covered this issue and mentioned that,
Even assuming that this notification is required to take care of the cases where the Exhibition is held outside India, but the payment is received in Indian Currency because of participation by the Indian Industrial houses, then the medicine is worse than the disease. That is because even if there is any genuine exporter of this service who is receiving the foreign exchange, has also been covered under this exemption, with the result, he is not entitled for any CENVAT Credit on the input services/ input nor he can claim any export benefits.
May be a minor amendment that the exemption applies to the cases where only the amount is received in India Rupees would help the genuine exporters.
Will the Board listen?
CBEC Letter F.No. 354/11/2011-TRU; Dated : March 22, 2011