PLACE OF PROVISION OF SERVICE:
As per section 66B , a service is taxable only when it is “ provided or agreed to be provided in the taxable territory”. Thus ,the taxability of a service will be determined based on the place of its provision.
According to section 66C (1) of the Finance Act 1994, the CG may considering the nature and description of various services ,make rules to determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided.
In exercise of the said power the CG has framed ‘Place of Provision of Service Rules,2012’
The persons for whom these rules are significant are:
- Exporters of service OR Importers of service
- Persons providing services in or receiving service from the state of J&K.
- Persons operating within India from multiple locations ,without having centralized registration.
- Persons providing services in or receiving services from SEZ.
Place of Provisions of services rules,2012: Rule 4 to Rule 12 covers place of provision of service based on nature of services as under-
| Rule | Nature of service covered | Place of provision |
| Rule-4 | Performance based services:
1. Services provided in respect of goods that are required to be made physically available by the recipient of service to the provider of service ,or to a person acting on behalf of the provider of service ,in order to provide the service. Provided that when such service are provided from a remote location by way of electronic means ,the place of provision shall be location where goods are situated at the time of provision of service. 2. Services provided to an individual ,represented either as the recipient of service or a person acting on behalf of the receipient which require the physical presence of the receiver or the person acting on behalf of the receiver ,with the provider for the provision of service. |
Location where services are performed
Location where services are performed |
| Rule-5 | Services relating to IP | Location where IP is located or intended to be located. |
| Rule-6 | Services relating to events:
Services provided by way of admission to ,or organization of, a cultural ,artistic, sporting, scientific, educational or entertainment event or a celebration ,conference ,fair, exhihibition or similar events and of services ancilliary to such admission or organization |
The place where the event is held. |
| Rule -7 | Services provided at more than one location:
Services specified under Rule 4 to 6 above ,if provided at more than one location |
The location in the taxable territory where greatest proportion of service is provided. |
| Rule-8 | Service provider and service receiver located in taxable territory:
This rule covers situations where the place of provision of a service provided in the taxable territory may be determinable to be outside the taxable territory by applying one of earlier rules 4 to 6 but the service provider and service recipient are located in taxable territory. |
The location of recipient of service |
| Rule-9 | Specified services:
Following services are covered under this : · Services by a banking company or a FI or a NBFC to account holders · Online information and database access or retrieval services · Intermediary services · Services consisting of hiring of all means of transport other than- -aircraft and -vessels except achts Up to a period of 1 month.
|
The location of service provider |
| Rule-10 | Goods Transport services:
· Services of transportation of goods ,other than by way of mail or courier. · Services provided by GTA |
Place of destination of goods
Location of person liable to pay tax.
|
| Rule-11 | Passenger transportation services | Place where passenger embarks for continuous Journey.
|
| Rule-12 | Services provided on board a conveyance:
Services provided on board a conveyance during the course of a passenger transport operation ,including services intended to be wholly or substantially while on board. |
First scheduled point of departure of that conveyance for the Journey. |
| Rule-14 | Order of application of Rules : Where the provisions of a service is,prima facie, determinable in terms of more than one rule | IIn accordance with the rule that occurs later among the rules that merit bequal consideration. |
Note –
The Residuary rule or default rule is contained in Rule-3 which is applicable only when a specific rule under rule 4 to 12 is not applicable. According to Rule-3 , the place of provision of service shall be location of the recipient of service. However , if location of the service receiver is not available in ordinary course of business ,the place of provision shall be the location of the provider of service.
Based on above default rule –
- Import of services – taxable : Where the location of receiver of a service is in the taxable territory ,such service will be deemed to be provided in taxable territory and ST is payable. In such a case the service receiver will pay tax under reverse charge mechanism.
- Export of services- Not Taxable : The receiver is located outside the taxable territory ,no service tax will be payable .Thus , if service receiver is located outside India or in J&K ,no service tax is payable.