Services availed by a person in India from non-residents Service provider

Indian Service Tax

Non-Resident Service Provider

Point No. 2

Services availed by a person in India from non-residents Service provider

In terms of Rule 2(I) (d) (iv) of the amended Service Tax Rules, 1994, when a non-resident or a person from outside India, who does not have an office in India renders service to a person in India, the recipient is liable to pay service tax for services rendered by such person outside India.

For such cases, the law is silent over several issues

(a) Who is required to register the recipient in his own name or in the name of such non-resident?

The Chairman replied that the recipient is required to obtain registration in form STl. However, the name & address of the non-resident alongwith details of his passport etc. are to be incorporated in the body of the registration. Similarly in ST -3 return such services and amount of service tax paid should be shown separately.

(b) If the recipient of. the service is already registered with the service tax department, does he require separate registration for services from non­resident?

Reply

No, subject to fulfilment of condition 'a' above.

(c) Is the recipient entitled to input tax credit in respect of service tax paid for the services of non-resident if the Indian firm/Company also renders same category of service to his clients?

Reply

Yes, subject to fulfilment of condition "a" above and such input credits can be utilized against the non-resident person's Service Tax account only, which the resident has been authorised to operate.

(d) If the recipient of service in India avails services of more than one non-residents, whether separate registration/ST Returns/assessments are required for each case or otherwise?

Reply

No. Mention of each such non-resident as per reply in (a) should be got trade on the registration certificate from concerned officer.

(e) If there is only one time service from a non-resident, does the recipient have to regirter, pay tax, file return and then surrender the Certificate of Registration.

Reply

Yes.

Sub Point

There are a few more incidental issues in the above context which are not dealt with in the law and in absence of this, both the department and assessees at large viz. the availers of services of non-residents remain confused as to the correct procedure - kindly comment.

Reply

The Chairman replied that, since the incidental issues referred to here have not been specified, no comments can be offered.

(Authority: RAC on 29/1/2003 of Mumbai-IV Commissionerate)

[Para 2.9.2 of Cir.No. 59/8/2003, dt. 20/6/2003]

In case of a non-resident service provider who does not have any office in India, the service receiver in India is liable to pay service tax. A doubt has been raised as to how such receiver would avail the service tax credit. As per the existing law, in such cases service receiver is required to take registration, to pay service tax and to comply with other procedural formalities. As there is no bar under service tax law on the service tax payer to take the same amount back as credit, the service receiver after having paid the service tax on behalf of the non-resident service provider, can take credit of the same on the basis of document/ bill/invoice under which he paid the service tax.