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Service tax applicability on commission paid by foreign company - Service Tax

#1 Issue Id: - 289
Dated: 4-12-2006
By:- Vs Hariharan
Service tax applicability on commission paid by foreign company

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A Pvt company registered in India receives commission from foreign principals for orders executed in India. The other facts are: a.The foreign principal does not have any office in India. b. the indian company has no authority to sign any agreemnt with the customer on behalf of the foreingn principal. c. service is delivered outside india as the principal is situated outside india. d. money is received from aborad in foreign exchange. i want to know whether service tax is to be paid by the indian company on the commission received from abroad e.

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#2 Dated: 4-12-2006
By:- Surender Gupta
In the query all the conditions of Export of Services are being satisfied except that the service must be "used" outside India. If the order was executed in India for which A pvt. company is taking commission, there is all the possibility that services are being used in India. However, it is the matter of facts and circumstances. You should carefully analysis the relevant documents again to find and frame the view about the usage of the services. If you find that the services are also being used outside India, you are entitled to avail the exemption.
#3 Dated: 14-12-2006
By:- Narender Kumar Garg
Yes, service tax is applicable. Because the law is said that the company have office in India. In the case the company has been registered in India as per companies act. Hence this thing have no value that whether the contracts are made by office established in india or not.

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