Indian Service Tax Enforcement Abroad?
THE CBEC seems to be on a foreign trip - they want to enforce their rules abroad. As part of the Budget exercises they have inserted a new definition in the Service Tax Rules:
"aggregator" means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator
In relation to service provided or agreed to be provided by a person involving an aggregator in any manner, the Service Tax is to be paid by:
1. the aggregator
2. if the aggregator does not have a physical presence in the taxable territory, any person representing the aggregator for any purpose in the taxable territory.
3. if the aggregator does not have a physical presence or does not have a representative for any purpose in the taxable territory, the aggregator shall appoint a person in the taxable territory for the purpose of paying service tax.
So, if Uber or some other aggregator does not have a representative in India, it is required to appoint a person in India for the purpose of paying Service Tax.
Can the Board enforce this? What will happen if an aggregator refuses to appoint a person in India for the purpose of paying service tax? Will service Tax officers go abroad with Show Cause Notices?
The TRU letter is silent on this issue. The letter in para 11.1 states,
In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator.
These provisions are already in force!