Service Tax on Upfront fee paid abroad

Hi Ajay,

This issue is certainly not free from doubt. It's been quite a whilesince the Delhi HC in Orient Crafts Ltd. v. UOI [2006] 5 STT 338(Delhi), upheld the constitutional validity of Section 66-A (reversecharge) of FA 1994. But the court had reserved its judgement on thefactual position as to whether or not services rendered abroad by acommission agent in procuring orders for his principal in India canbe said to have been "received in India".But in a recent decision in the case of Welspum Gujarat Stahl RohrenLtd. v. CCE&C, Vadodara-II [2007] 8 STT 165, the Mumbai Tribunalgranted stay of demand raised on the assessee where the assesseepaid commission to foreign companies who booked orders for theassessees in their respective countries. The tribunal held thatprima facie the services were provided outside India and not inIndia.But many exporters are still coughing up ST on foreign commission.There's no disputing the fact that services provided from outsideIndia and received in India are taxable in India, and by virtue ofthe reverse charge mechanism, the service recipient himself isdeemed to be the service provider.The big question is: When can we say that the services have beenreceived in India?Neither Section 66A nor the Taxation of Services (Provided fromOutside India and Received in India) Rules 2006 provide any clear-cut guidelines on how to determine the "receipt" of somethingintangible in India.I think till the time the CBEC clears the mist on this issue, youcan hold back the ST at least on the upfront fee paid to foreignbranch of the Indian bank on ECB raised.Thanks,CA Sanjeev Bedi--- In

ICAI_CIRC_MEERUT_CA@yahoogroups.com, ajay rajput wrote:>> Hi, And Thanks..!>> Sanjeev Ji.for such a descriptive Note to enhance myknowledge....but it seems that it has face litigation as the AOshall not consider the intention of section and painly will issueshow cause notice....>>> Sanjeev ji i would further like to share another topic regardingthe> Upront fees payment to overseas branch of an indian Bank forarranging External Credit Borrowings (ECB) is it liable to ServiceTax..>>>>>> With Regards>> CA AJAY RAJPUT> New Delhi>> ca.ajayrajput@...