Indian Service Tax extended abroad
From DDT 131 - 08 06 2005,
Indian service tax extended abroad, but mercifully exempted in some areas - Service provided by certain Service providers like Customs House Agent , Steamer Agent, C & F Agent etc,. are exempted if the Service provider is a non-resident person and the service is consumed outside India in the course of sailing of a ship. Is the Indian government competent to levy service tax on Services rendered abroad? But that seems to be what the Government believes. They have levied a tax on services provided abroad and even granted certain exemptions on services availed abroad.
Exemption to service provided abroad – While the government has expanded its jurisdiction to levy service tax on Services rendered abroad, they have been kind enough to exempt Services provided to an individual who is abroad if there is no commerce or industry involved. If a barber in India provides a hair cut in Paris, the Service is perhaps exempted if the hair is not sold.
When we covered it way back in June 2005, nobody believed that the Government will be so naive as to tax services abroad; 'there is something wrong, maybe you did not understand the law properly", they told us until the wiser departmental officers started demanding service tax from Indian companies who are getting services like commission agency and commercial coachingand training abroad. We have been flooded with mails and calls after we reported that the Madras High Court has granted a stay on these provisions. Toady we are carrying a detailed analysis of the issue in our "Special Column". We hope to bring you the judgement later in the day.