India may be one but service tax has two Indias: one for export of services another for import of services!
By TIOL News Service
NEW DELHI, JULY 06, 2009: THE Notification No. 21/09-ST dt 7/07/2009 has been issued amending the notification no. 1/2002-ST dt. 1/03/2002. Through this amendment the definition of India has been amended to include- “installations, structures and vessels in the continental shelf of India and the exclusive economic zone of India”.
By virtue of the notification No. 1/2002 the central government has extended the geographical applicability of provisions of Service tax to the designated areas in the Continental Shelf and Exclusive Economic Zone of India as declared by the Notifications of the Government of India in the Ministry of External Affairs Nos. S. O. 429 (E) dated the 18th July 1986 and S.O. 643 (E), dated the 19th September, 1996 with immediate effect. As per the amendment now made (vide Notification No. 21/09-ST dt. 7/07/2009) the provisions of the Finance Act, extended to “installations, structures and vessels in the continental shelf of India and the exclusive economic zone of India”.
CBEC letter dt. 6/07/2009 mentions as follows:
Changes in territorial jurisdiction:
7.1 Vide notification No. 1/2002-ST dated 01.03.2002, the provisions of Chapter V of the Finance Act, 1994 (which governs the levy and collection of service tax were extended to the designated areas in the Continental Shelf of India (CSI) and the Exclusive Economic Zone (EEZ) of India, as declared by Ministry of External Affairs Notification Nos. S.O. 429(E) dated 18.07.1986 and S.O. 643 (E) dated 09.09.1996. Notification No. 1/2002-ST has been amended to extend the provisions of Chapter V of the Finance Act, 1994 to installations, structures and vessels in the entire CSI and EEZ of India. Thus, services provided to or from CSI and EEZ of India would be covered within the ambit of the provisions relating to service tax w.e.f. 07.07.2009 (Notification No. 21/2009-ST dated 07.07.09 refers). Consequential changes have also been made in the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 (Notification No. 22/2009-ST dated 07.07.09 refers).
The service tax rules- Export of Services Rules (Notification No. 9/2005 –ST) and the Taxation of Services (Provided from outside India and Received in India) Rules, 2006 (Notfn No. 11/2006-ST )- also defines India as constituting the designated areas under Continental Shelf and Exclusive Economic Zone of India (Prior to amendment )
The definition of India appearing in Import of Services has been amended vide Notification No 22/09 dt. 7/07/2009 on similar lines of Notification No. 21/2009 i.e as constituting “installations, structures and vessels in the continental shelf of India and the exclusive economic zone of India”. However the definition of ‘India’ appearing in Export of Services rules (Notification No. 9/2005-ST) is left untouched. Thus ‘India” has one meaning for import of services and another meaning for export of services as under:
Import of Services -‘(e) “India” includes the installations, structures and vessels in the continental shelf of India and the exclusive economic zone of India;
Export Services - Explanation.- For the purposes of this rule “India” includes the designated areas in the continental shelf and Exclusive Economic Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs numbers S.O. 429(E), dated the 18th July, 1986 and S.O.643(E), dated the 19th September, 1996.
Are we opening doors for future dispute in this regard?
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