Import of Service i.e. Payment to architect of Dubai for construction of House in India, Service Tax

[sumeet tholle]

Dear Sir,

One of the client constructed home for himself at Aurangabad- Maharashtra and for which he paid Architect Fees to the architect of Dubai in Dubai's currency.

The complete transaction took place during January 2012 to May 2012 i.e. before Jully 2012.

 Department demanding Service Tax under Import of Service and saying expenditure on bunglow is not for personal use.

We submitted Sec. 66A,

Sec. 66A - Charge of service tax on services received from outside India:-

(1) Where any service specified in clause (105) of Section 65 is, -

(a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and

(b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply:

Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply:

Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided.”

Kindly Guide.

Sumeet C. Tholle,

CA, Aurangabad.

Posts / Replies

[Madhukar N Hiregange]

As per the POPS the place of provision of the architects service would be India since the property is in India. 

Not payable due to 2 reasons:

1. However the POPS does not have any enabling section to provide for power to levy - similar to the disputes between 2002-2006 until the section 66A was inserted 

2. mega exemption 35 serial a) says not liable under reverse charge by individual in relation to purpose other than commerce or business. 

This indicates that officers of ST do not even read the provisions!!!