The Service tax department has called for information from many diamond companies to analyze the applicability of service tax on import of softwares. Can the department take such a stand ?
There is a very useful decision reported today in Taxmann related to a decision of an European court.
Subsidiary to be treated as 'fixed establishment' if it is acting as an agent of its holding co.
In this case, assessee of Denmark was engaged in tour operator business. Assessee incorporated a subsidiary in UK and appointed such subsidiary as its agent. UK Subsidiary marketed tour packages on behalf of assessee. UK authorities demanded service tax from assessee contending that place of supply was fixed establishment in UK. It was held that though subsidiary had a separate legal personality, however, under agency agreement, subsidiary was merely an auxiliary organ of assessee. Since subsidiary had sufficient human and technical resources and other characteristics of a 'fixed establishment', hence, place of supply of services was 'fixed establishment (subsidiary)' at UK and not place of business establishment in Denmark, as provision of services was more directly related to fixed establishment. Accordingly, services were taxable in UK. - COMMISSIONERS OF CUSTOMS AND EXCISE v. DFDS A/S [2012] 24 taxmann.com 6 (ECJ)
the Government of India vide Notification No. 41/2012-Service Tax dated 29th June 2012 has revised the Service Tax refund for the products coming under Chapter or Sub-Heading 71 from 0.03% to 0.06%. Thus, even for cut & polished diamond exports, service tax refund at 0.06% of FOB value shall be available on input services used for the export of the diamonds beyond the factory gate. There shall be no need to evidence the actual service tax component in expenses incurred and the 0.06% rate shall be a flat applicable rate. This notification shall be helpful for those who are currently not able to claim the refund for want of sufficient documentation to track the service tax amount to the export invoices, say for eg. in case of service tax component in certification charges.
There is a very useful decision reported today in Taxmann related to a decision of an European court.
ReplyDeleteSubsidiary to be treated as 'fixed establishment' if it is acting as an agent of its holding co.
In this case, assessee of Denmark was engaged in tour operator business. Assessee incorporated a subsidiary in UK and appointed such subsidiary as its agent. UK Subsidiary marketed tour packages on behalf of assessee. UK authorities demanded service tax from assessee contending that place of supply was fixed establishment in UK.
It was held that though subsidiary had a separate legal personality, however, under agency agreement, subsidiary was merely an auxiliary organ of assessee. Since subsidiary had sufficient human and technical resources and other characteristics of a 'fixed establishment', hence, place of supply of services was 'fixed establishment (subsidiary)' at UK and not place of business establishment in Denmark, as provision of services was more directly related to fixed establishment. Accordingly, services were taxable in UK. - COMMISSIONERS OF CUSTOMS AND EXCISE v. DFDS A/S [2012] 24 taxmann.com 6 (ECJ)
the Government of India vide Notification No. 41/2012-Service Tax dated 29th June 2012 has revised the Service Tax refund for the products coming under Chapter or Sub-Heading 71 from 0.03% to 0.06%. Thus, even for cut & polished diamond exports, service tax refund at 0.06% of FOB value shall be available on input services used for the export of the diamonds beyond the factory gate. There shall be no need to evidence the actual service tax component in expenses incurred and the 0.06% rate shall be a flat applicable rate. This notification shall be helpful for those who are currently not able to claim the refund for want of sufficient documentation to track the service tax amount to the export invoices, say for eg. in case of service tax component in certification charges.
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