ST- Judgment on Place of Provision of Service Rules, 2012

Place of Provision of Service Rules, 2012 - Place of provision is location of service receiver

M/s. Tandus Flooring India Pvt. LTD. vs. the Commission of Service Tax, Bangalore (2013 –TIOL – 03-ARA)

Facts:

The applicant, an Indian company (wholly-owned subsidiary of a Singapore company) with the objective of strengthening and enhancing sales ofthe Products of Tandus USA and Tandus China to its Indian customers against consideration receivable in freely convertible foreign exchange, agreed to provide services of marketing and promotion of products to Indian service recipients. The services also included demonstration of products, communication with customers, management of dealer accounts, coordination with representativesof customers, etc.The applicant sought advance ruling on the following questions:

• What would be the place of provision of the marketing and support services provided in India bythe company to Tandus US and Tandus China in terms of the Place of Provision of Service Rules 2012?

• Whether the said services would also qualify as export of taxable services under Rule 6A of the Service Tax Rules, 1994?

Held:

Considering the case of service proposed to be provided from Indian territory to a business entity located outside India, it was observed that the benefit of service accrued outside India. Accordingly, in terms of the applicable Place of Provision of Services Rules, 2012, the Han. Authority held that the service so provided by Tandus India was covered under the default Rule 3 which stipulated that the place of provision shall be the location of the service recipient i.e., Tandus USA and Tandus China and thus service was deemed to be provided in a non-taxable territory. Further, referring to Rule 6A of the Service Tax Rules, 1994, the Hon. Authority held that since the applicant satisfied all the conditions of the said Rule, the services so provided would tantamount to export.