Why Google is paying Service Tax while Facebook is not?
RECENTLY the Delhi High Court (in the same writ) wanted to know from the Government why Google is paying Service Tax while Facebook is not.
The ASG appearing for the Government submitted:
The service tax is being collected as per the provisions of Chapter V of the Finance Act, 1994. The said Act is applicable to the whole of territory of India other than the State of Jammu and Kashmir. The taxable services, as defined in the said Act, provided or agreed to be provided to a person in the territory of India by the companies having their fixed establishment or business establishment outside India are liable to be taxed in the hands of the recipients of such services. The Internet companies having their fixed establishments or business establishments outside India and providing taxable services in India are not liable to pay service tax themselves. However, the recipient of said taxable services in India are liable to pay services tax under the provisions of said Act. In the Budget 2014-15, Govt. of India has announced that sale of space or time slots for advertisements other than advertisements broadcast by Radio and Television, have been removed from ‘negative List of Services', and hence, all companies/entities, which are providing such services, are now amenable to Service Tax. This provision has come into force w.e.f. 01.10.2014.
2. That as and when it comes to the notice of the Department of Service Tax, that there is a shortfall/non-payment of service tax by any company/entity, necessary action is initiated in accordance with law for effecting recovery etc. from such defaulting entities.
3. This practice is followed regularly/periodically as per law.
The ASG has also assured the Court that service tax shall be collected in accordance with law.