Rishi Chanan, B.A., LL.B, Advocate
Every service w.e.f from 01.07.2012 can be considered as Export only if, it fulfills all conditions of Rule 6A(1) of the STR, 1994 which stipulates in relation to call centre’s/ BPO’s as under:
A The provider of the services is located in taxable territory. (Fulfilled)
B The Recipient is located in outside India. (Fulfilled)
C The service is not specified in Section 66D of the Act. (Fulfilled)
D If the place of provision shall be outside India, then the service is to be called export of Service under this condition and the place of provision has to determine by Place of Provision Rules, 2012.
The provisions of call centre/BPO services can be merit consideration/determined under following two rules:
Rule 4(b) of Place of Provisions Rules, 2012: ………….“services provided to an individual, represented either as the recipient of service or a person acting on behalf of the recipient , which require the physical presence of the receiver or the person acting on behalf of the receiver, with the provider for the provision of the service.”
The Services provided by the call centre can be classified in performance based services under this Rule as it is being rendered only in the presence of an individual (Rendered in Person and Receive in Physical presence), the service is actually rendered by the provider to a person other than the receiver, who is acting on behalf of the receiver then the place of provision will be the place where services are actually performed. Then this condition is not fulfilled are liability has to be on the Services Provider located in India. (Not Fulfilled)
Rule 9 (b) of Place of Provisions Rules, 2012: …..“online information and database access or retrieval services.”
If the services provided by call centres/BPO’s are classified in this Rule then the place of provision shall be the location of service receiver, then this condition shall be fulfilled and service be export of Service and exempt from Service tax. But the following condition as per the Guidance Notes on Service Tax dated 20.06.2012 in Para 5.9.5 shall be kept in mind:
5.9.5 What are “Online information and database access or retrieval services”?
“Online information and database access or retrieval services” are services in relation to online information and database access or retrieval or both, in electronic form through computer network, in any manner. Thus, these services are essentially delivered over the internet or an electronic network which relies on the internet or similar network for their provision. The other important feature of these services is that they are completely automated, and require minimal human intervention.
Examples of such services are:-
(i) online information generated automatically by software from specific data input by the customer, such as web-based services providing trade statistics, legal and financial data, matrimonial services, social networking sites;
(ii) digitized content of books and other electronic publications, subscription of online newspapers and journals, online news, flight information and weather reports;
(iii) Web-based services providing access or download of digital content.
The following services will not be treated as “online information and database access or retrieval services”:-
(i) Sale or purchase of goods, articles etc over the internet;
(ii) Telecommunication services provided over the internet, including fax, telephony, audio conferencing, and video conferencing;
(iii) A service which is rendered over the internet, such as an architectural drawing, or management consultancy through e-mail;
(iv) Repair of software, or of hardware, through the internet, from a remote location;
(v) Internet backbone services and internet access services.
Moreover, call centre/ BPO’s in this situation can take the shelter of Rule 14 of these Rules which stipulates where the provisions of service is classifiable under more than one rule than it shall be determined in rule occurs later among merit equal consideration. But the call centre/BPO’s has to fulfill the criteria of above para reg. Online Information Services. The the condition will be fulfilled and services shall be Export of Service. (FulFilled)
E The payment has been received in convertible currency. (Fulfilled)
F The provider and recipient are not merely establishments of a distinct person under item (b) of Explanation 3 of Clause (44) of the Section 65B of the act. (Fulfilled)
Hence, the services provided by the call centre’s/BPO’s could only be considered as Export of Services by satisfying above conditions. It is also to be noted that benefit of Rule 6A(2) provides rebate can only applicable if services to be considered as export of services.
(Author can be reached at firstname.lastname@example.org or on cell no. Mobile No. 98158-28244 )