Tandus India Case: Background
Tandus India entered into a contract with its foreign affiliates which required Tandus India to provide few marketing related services to foreign affiliates in lieu of receiving service fees. It was required to promote, demonstrate and market the products of foreign affiliates to consumers in the country. It also provided information to these foreign affiliates about market development, potential, client contacts etc. It was also required to assist the customers of foreign affiliates in India in selecting the products; etc.
Under the Service Tax Negative list regime, international services are covered under Service tax in case the place of provision of such services is in India. However, Tandus India argued that the services it provided do not get covered under any of the specific rules but under the residual rule of the Service Tax Place of Provision of Service Rules. The residual states that the provision of service should be the location of the recipient of services.
Tandus India Case: Verdict
The AAR upheld the argument of Tandus India, further made clear that as such services are not covered under the Negative list and receipt of consideration in convertible foreign exchange, etc., services provided by Tandus India would qualify as ‘export’.
Tandus India Case: Implication
The latest ruling qualifying marketing and related services to affiliate aboard as ‘Export’ would have far reaching implications for companies providing Marketing and Related Support Services in India.
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