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TMI BlogService tax on cost of sales promotion in India for a foreign principleX X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax on cost of sales promotion in India for a foreign principle X X X X Extracts X X X X X X X X Extracts X X X X ..... ost reimbursed by the client for sales promotion in India attract Service Tax for Sales Promotion and Market development done India for that foreign client? The commission will be paid on Sales of product in India by the client in convertible foreign currency, can that be treated as export of service under new rules? Reply By Rajagopalan Ranganathan: The Reply: Sir, "Business Auxiliary Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e means any service in relation to promotion or marketing or sale of goods produced or provided by or belonging to the client. From the description given by you it appears that you are providing "Business Auxiliary Service" to your foreign client. The said service is provided by a service provider, i.e., you in India and you have a permanent establishment in India. Therefor the service rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... you is within India and hence it cannot be treated as export for the reason that the place of provision of service should be outside the taxable area, that is, a foreign country or State of Jammu & Kashmir. therefore you are liable to pay service tax on the fee received by you for sales promotion and market development service. You also required to pay service tax on commission earned by you for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales of the product. Reply By sanjeev bajaj: The Reply: I have different opinion on this. It can be viewed as:- 1. There are two services ie, sales promotion and commission on sales of products. 2. As per Rule 3 of the Place of Provision Rules, the place of provision of services is the location of the recipient as the foreign company does not have any business or fixed establishment in taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e territory. 3. It does not fall under any Rule 4 to 12 of pop. 4. It attracts Rule 6A of Service Tax Rules, 1994 for export of services. Further, the reimbursement of sales promotion expenses can also be treated as reimbursement to pure agent if it fulfils the requirement of Rule 5 of Service Tax(Determination of Value) Rules, 2006.The facts has to be analysed properly, I propose for views wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether similar or different and discussion on the subject with more disclosure on facts, Reply By Vinay Kunte: The Reply: Then you both for your valuable views. From the comments it is clear that both the Service activities - Sales Promotion in India and Commission on Sales will have to treated in the same manner. So either both would be taxable ot both can be treated as export of service. I be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve, the decision in case of Microsoft Corporation Vs Comm. Service Tax Delhi, will provide the correct direction in case of difference in view. Please provide further guidance in case you can explain any further. Reply By Vinay Kunte: The Reply: Thank you. Reply By LAKSHMI NARAYANAN TR: The Reply: As per POP Rule 14 - Order of Rule, 14. Notwithstanding anything stated in any rule, where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provision of a service is, prima facie, determinable in terms of more than one rule, it shall be determined in accordance with the rule that occurs later among the rules that merit equal consideration if we apply Rule 14 out of Rule 3 - Place of Recipient Rule 4 - Where goods are made physically available Rule 9(c) - Intermediary Services which are applicable in the instant discussion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 9(c) occurs later might attract and accordingly ST might attract.
Any other expert views may please be provided for better understanding.
Reply By Vinay Kunte:
The Reply:
Thank you for the valuable guidance. X X X X Extracts X X X X X X X X Extracts X X X X
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