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CIRCULAR NO 111/05/2009-ST
Dated:
Subject: Applicability of the provisions of the Export of Services Rules, 2005 in certain situations
In terms of rule 3 (2) (a) of the Export of Services Rules 2005, a taxable service shall be treated as export of service if "such service is provided from India and used outside India" Instances have come to notice that certain activities, illustrations of which are given below, are denied the benefit of export of services and the refund of service tax under rule 5 of the Cenvat Credit Rules, 2004 [notification No. 5/2006-CE (NT) dated 14.03.2006] on the ground that these activities do not satisfy the condition 'used outside India',-
(i) Call centres engaged by foreign companies who attend to calls from customers or prospective customers from all around the world including from
(ii) Medical transcription where the case history of a patient as dictated by the doctor abroad is typed out in India and forwarded back to him;
(iii) Indian agents who undertake marketing in
(iv) Foreign financial institution desiring transfer of remittances to
The departmental officers seem to have taken a view in such cases that since the activities pertaining to provision of service are undertaken in
2. The matter has been examined. Sub-rule (1) of rule 3 of the Export of Services Rule, 2005 categorizes the services into three categories:
(i) Category (I) [Rule 3(1)(i)] : For services (such as Architect service, General Insurance service, Construction service, Site Preparation service) that have some nexus with immovable property, it is provided that the provision of such service would be 'export' if they are provided in relation to an immovable property situated outside India.
(ii) Category (II) [Rule 3(1)(ii)] : For services (such as Rent-a-Cab operator, Market Research Agency service, Survey and Exploration of Minerals service, Convention service, Security Agency service, Storage and Warehousing service) where the place of performance of service can be established, it is provided that provision of such services would be 'export' if they are performed (or even partly performed) outside India.
(iii) Category (III) [Rule 3(1)(iii)] : For the remaining services (that would not fall under category I or II), which would generally include knowledge or technique based services, which are not linked to an identifiable immovable property or whose location of performance cannot be readily identifiable (such as, Banking and Other Financial services, Business Auxiliary services and Telecom services), it has been specified that they would be 'export',-
(a) If they are provided in relation to business or commerce to a recipient located outside
(b) If they are provided in relation to activities other than business or commerce to a recipient located outside India at the time when such services are provided.
3. It is an accepted legal principle that the law has to be read harmoniously so as to avoid contradictions within a legislation. Keeping this principle in view, the meaning of the term 'used outside
4. All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned. These instructions should be given wide publicity among trade and field officers.
5. Please acknowledge receipt.
6. Hindi version follows.
F.No.137/307/2007-CX.4 (Pt.)
(Gautam Bhattacharya)
Commissioner (Service Tax) |
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