Thứ Sáu, 28 tháng 12, 2012
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What is Export of Service?
Defining export of service has been very tricky due to intangible nature of service transaction. Due to this nature of services, there has been constant confusion regarding meaning of export of services. In Microsoft Corporation India Pvt. Ltd. v. CST, New Delhi [2009 (15) STR 680], an attempt was made to define the export transaction in services. This case relates to Stay application and hence the view taken by the Hon’ble Tribunal in this case is prima facie view. This prima facie view has also been approved by Delhi High Court as reported in 2009 (16) STR 545 (Del). The facts in the Microsoft case is that M/s Microsoft India Pvt. Ltd. has an agreement with Microsoft Singapore Operation Limited. On behalf of the Singapore entity, Microsoft India was providing services to customers based in India. M/s Microsoft India was receiving payment from M/s Microsoft Singapore in foreign currency. The question was whether it is export of service? The Hon’ble Tribunal held, “The service provided in India was consumed without reverting back to foreign principals for consumption abroad. Ultimate outcome of service having been exhausted in India, there appears to be no export of such services since efforts in India generated service recipients in India only. The benefit of service terminated in India only without travelling abroad. Whether service is directly provided by a foreign principal in India or foreign principal providing service in India through its agents in India makes no difference under Service tax law when Service tax is a VAT and that too destination based consumption tax.”
In any transaction related to Service, we need to understand as to who is the Service Recipient. Service recipient is the person who is making payment for the service. Any person who is not making payment of services to the service provider is not a service recipient in the eyes of service provider. Further, service provider is not raising any bill to the person who is not paying for the services, and hence he cannot collect service tax from that so called service recipient. In the present case there are two transactions. Microsoft India is providing services to Microsoft Singapore. This is export of service. Various persons in India are receiving services from Microsoft Singapore, and they may be liable to pay Service Tax through reverse charge method under Section 66A of the Finance Act. The distinction between Service Recipient who is paying from the service, and persons actually availing benefit of these service are always different. A corporation, who generally pays for the services cannot avail benefit of most of the services- it cannot stay in hotels, or travel. It cannot use software also. The persons actually availing these services are different from corporation. It appears that in the present case these points were not considered and I am sure at the time of final disposal of the case, these issues will be examined.
Export of Service Rules, 2005 defines export of services in two parts. Rule 3(1) defines export of services in terms of places where services are provided or received. Rule 3(2) defines export of services in terms of payment received in foreign exchange. It is to be noted here that Rule 3(1) and 3(2) are independent of each other, i.e. a provision of service is export of service if it satisfies either the definition of 3(1) and 3(2). Export of anything (goods or services) and receipt of payment in foreign exchange are two entirely different things, governed by different statute. Export is governed by trade & revenue statutes, where as receipt of payment is governed by Foreign Exchange Management Act. Thus there can be export f goods and services, without receipt of payment in foreign exchange. In custom parlance, connected with export of goods, it is well known in terms of waiver of Guaranteed Receipt given by the authorized dealers. Let us take a simple example. Jet airways provides air travel services from London to Newyork. An Resident Indian national book an air ticket. Obviously the Indian national is required to make payment to the Service provider in Indian Rupees. Is it export of Service? Obviously yes. Irrespective of the fact that payment is received in Indian Rupee, it is an export of service. These types of cases are covered in Rule 3(1) of the Export of Services Rule, 2005. Rule 3(2) of the Export of Services Rules defines what we understand as “deemed export”. It reads as, “The provision of any taxable service specified in sub-rule (1) shall be treated as export of service when the following conditions are satisfied, namely……….” The term treated as export of service is very important. What Rule 3(1) defines is export of service, whereas Rule 3(2) defines as something which may not be export of service, but shall be treated as export of service. Let us take another example of Jet Airways. It provides air travel service from Delhi to Mumbai. Say, a person based in London book a ticket for this service. Obviously he will pay in foreign exchange. Is it export of service? In terms of Rule 3(1), it is not export of service but due to deeming definition of Rule 3(2) of Export of Service Rules, it is export of service. The concept of export and deemed export is well known in tax parlance. Rule 3(1) provides the concept of export, whereas Rule 3(2) defines the concept of deemed export, i.e. something which will be treated as export. When those concepts are applied to Rule 3(1) and 3(2) of Export of Services Rules, the matter becomes clear and easy to comply with.
Thứ Ba, 25 tháng 12, 2012
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How to Get Started in the Import Industry
Step #1. Research the product you want to import:
Most companies already have a product that they want to buy or produce and sell in the market. However, if you are still in the planning phase, include researching the products that you will be importing in your list of priorities. Remember to check out your competition. Importing products that other players are in already selling will affect your pricing limits. If you want to be competitive, you want to make sure that aside from selling quality products, you should be able to realize an ideal amount of profit after all the additional costs of importing and other possible expenses.
Step #2. Can your products be imported?
When you have an idea of what products will sell to your target market, then it is time to find out whether or not the goods can be imported. Most items can be imported. However, there are certain types of food, equipment, and plants that cannot be shipped from one country to another. Determine which countries offer the products you need. Then, communicate with the export bureaus of that country to determine whether you can import the items that you wish to bring to and sell in your country.
Once you have a list of those items, check whether the products require licenses from the Department of Trade and Industry Import Licensing Branch before being legally imported so that you can make the necessary arrangements.
Step #3. Apply for a registration number and other requirements.
Starting an import business brings forth many legal requirements. There are federal, state, or local permits and licenses that you need before your operations can commence. Since the regulations differ depending on the industry, location of your business, and various other factors, accomplishing the mandatory licenses and permits should be your priority.
You can arrange all of these legal prerequisites on your own or you can make life simpler by hiring a full service, certified customs broker. A qualified customs broker can prepare all the documents needed for importing goods. Make sure that you will be hiring a customs broker licensed by the U.S. Customs and Border Protection Service.
Step #4. Establish good business relationships with buyers.
Because you will be engaged in the importing business, many of your buyers or customers will be intermediaries or distributors. It is important to establish good trading relations with these people to ensure that they will continue to do business with you in the future. Do not take shortcuts when setting up relationships with potential dealers. There are a lot of importers out there, and a dealer wants to deal with an importer who gives them personal attention and service. Dealers are the lifeblood of most import operations; when you run into a product defect or delayed shipping, a dealer will be far more likely to stick with you if they have been treated as a top priority from day 1.
Step #5. Find a financial institution that provides a good international banking support.
It was mentioned earlier that starting an import company can be expensive. Its ongoing management can be more so. For this reason, finding a banking institution that can provide you with your financial needs both for your local and international operations is essential. A bank that will offer you a line of credit is useful. You will also need a bank that can create a letter of credit. A letter of credit is a way to secure a factories performance before they receive the funds from the bank. This works in essentially the same way an escrow account works in real estate. The bank holds the money until the factory performs, and which point the factory will receive payment from the bank.
Step #6. Find a customs broker that will handle all of the paperwork and logistics of the import.
You want to be in the business of developing, marketing, and selling a great product. What you want to avoid is spending days figuring out customs paperwork, coordinating the logistics of ocean freight, local drayage, and other import related headaches. Choose a customs brokerage service that agrees to handle all of the above.
These are basic steps to help you start your importing business. The stakes are high and although there are serious risks involved, it is no longer possible for any product based business to ignore international trade. If you do, a competitor will do it it, and your business will likely suffer.
Article Source: EzineArticles.com