P LACE OF P ROVISION OF S ERVICES R ULES Enabling Service Tax Practice Hyderabad Branch of SIRC of ICAI October 27, 2012

Preamble Follows that the essence of levy of service is consumption – destination based consumption tax Provides for:  Identification of jurisdiction / situs for payment of service tax;  Determination of the location of service provider or receiver;  Relevant for determining the levy of service tax and grant of concessions / exemptions

Rules Notified Place of Provision of Service, 2012  Notification No. 28/2012 dated  With effect from Export of Service Rules, 2005 Taxation of Services (Provided from outside India and Received in India) Rules, 2006 R ESCINDED

New Provisions Export of services – as per Rule 6A of the Service Tax Rules  Notifn No. 36/2012 dated Person liable to pay service tax  Services received from persons located in the non- taxable territory and received by persons located in the taxable territory – the recipient of such service  Notifn No. 36/2012 dated

Export of Services Upto Based on classification of services – 3 categories Payment is received in convertible forex WEF Provider of services is located in taxable territory Receiver of service is located outside India Service is not a service listed under Section 66D Place of provision of service is outside India Payment is received in convertible forex Provider and receiver are not merely establishments as required for reverse charge

Import of Services Upto Based on classification of services – 3 categories Provided from any person outside India and received by any person in India WEF Provided by any person located in a non-taxable territory Received by any person located in the taxable territory

Important Expressions Location of the service provider Location of the service receiver

Location of SERVICE PROVIDER Where SP has obtained a single registration (centralised or otherwise)  The premises for which registration is sought Other SPs  Location of his business establishment  If services provided from a place other than the business establishment – the location of fixed establishment  If provided from more than 1 establishments – the establishment most directly concerned  In absence of the above – usual place of residence

Location of SERVICE RECEIVER Where SR has obtained a single registration (centralised or otherwise)  The premises for which registration is sought Other SRs  Location of his business establishment  If services received at a place other than the business establishment – the location of such fixed establishment  If received at more than 1 establishments – the establishment most directly concerned  In absence of the above – usual place of residence

Rules – what is “place of provision” 3.Generally, Place of Recipient of Services 4.Performance Based Services 5.Services Relating to Immovable Properties 6.Services Relating to Events 7.Services Provided at more than one Location 8.Where Provider and Recipient are located in the Taxable Territory 9.Specified Services 10.Goods Transportation Services 11.Passenger Transportation Services 12.Services Provided onboard a conveyance

Place of Recipient of Services GENERALLY, the place of recipient of services shall be the place of provision of services If such place is not available in the normal course of business, it shall be the location of the provider

Performance Based Services Place of provision shall be the place where such services are actually performed In respect of goods that are required to be made physically available by the recipient  Where such goods are provided thru a remote location – shall be where the goods are located  Not applicable in respect of goods imported temporarily for repairs…. Yet to be prescribed Services provided to an individual which requires physical presence of the receiver

Services - Immovable Properties Place where the immovable property is located / intended to be located Services provided directly in relation to immovable property Including services of experts, estate agents, hotel accommodation, rights to use immovable property, coordination of construction work, architects, interior decorators

Services Relating to Events Place where the event is held Services provided by way of admission to or organisation of cultural, artistic, sporting, scientific, educational or entertainment event or a celebration, conference, fair, exhibition or similar events Including ancillary services

From more than 1 location The location where the greatest proportion of the services is provided  Applicable only for ‘performance based services’, ‘immovable property related services’ and ‘events’

Provider and Recipient Located in Taxable Territory Shall be the location of the recipient of service

Specified Services Shall be the location of the service provider Services provided by banking company or financial institution or NBFC to account holders Online information and database access or retrieval services Intermediary services Hiring of any means of transport (upto 1 month)

Goods Transportation Shall be the destination of goods For transportation of goods other than by way of courier or mail For GTAs – the location of the person liable to pay tax

Passenger Transportation Where the passenger embarks on the conveyance for a continuous journey

Services - Onboard Conveyance Services provided onboard the conveyance during the course of passenger transport operation - the place of first scheduled point of departure

Issues !!! 1. Situs for payment of service tax – destination based Should providers register and remit tax at the destination? 2. Passive receiver of services 3. Bundled services – classification vs. situs 4. Services USED at a place other than the business establishment 5. Passenger embarking in a non-taxable territory 7. Establishments of the same person are treated as different – only for reverse charge Not for export of services !!

Singhvi, Dev & Unni Thank you