Export of services [Rule 6A of the Service Tax Rules, 1994] :
(i) Conditions to be fulfilled for service to be treated as export of service [Sub-rule (1)]:-The provision of any service provided or agreed to be provided shall be treated as export of service when,-
(a) the service provider is located in the taxable territory,
(b) the service receiver is located outside India and the place of provision of the service is outside India,
(c) the service is not a service specified in the negative list (Section 66D) of the Act,
(d) the payment for such service has been received by the service provider in convertible foreign exchange, and
(e) the service provider and service receiver are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act.
| As per item (b) of Explanation 3 of clause (44) of section 65B an establishment of a person in the taxable territory and any of his other establishment in a nontaxable territory shall be treated as establishments of distinct persons. |
(ii) Central Government empowered to grant rebate on inputs/input services used in providing service exported [Sub-rule (2)]: Where any service is exported [in terms of sub-rule (1) above], the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification.
Safeguards, conditions and limitations for claiming rebate on inputs and input services: In exercise of this power, the Central Government has issued Notification No. 39/2012-ST dated 20.06.2012 providing the safeguards, conditions and limitations for claiming rebate on inputs and input services:-
Conditions and limitations:-
1. Service has been exported in terms of rule 6A.
2. Duty on the inputs/service tax on input services, rebate of which has been claimed, has been paid to the supplier/service provider respectively. Duty will include National Calamity Contingent Duty also.
If the exporter himself is liable to pay for any input services; he should have paid the service tax to the Central Government.
3. No CENVAT credit has been availed of on inputs and input services on which rebate has been claimed.
4. In case any of the aforesaid conditions is not fulfilled, rebate paid, if any, shall be recoverable with interest in accordance with the provisions of section 73 and section 75 of the Finance Act, 1994.
5. Amount of rebate claimed is not less than Rs 1,000.
The Notification also prescribes the procedure for claiming the rebate on inputs and input services.