Government
of India
Ministry
of Finance
Department
of Revenue
(Central
Board of Excise and Customs)
***
New
Delhi, dated the 23rd May, 2007
To,
The Chief of Protocol,
Ministry
of External Affairs,
South
Block
New
Delhi-110001
Sir,
Sub:-
Procedure for granting exemption from service tax to taxable services provided
to foreign missions/ consulates and to the personnel posted there in India
–-reg
Please refer to discussions held on the above subject between the
Department of Revenue and the Ministry of External Affairs. Presently
‘service specific exemptions’ are available to certain specified foreign
missions/ consulates (vide notification Nos. 5/96-ST, 10/96-ST, 44/98-ST,
50/98-ST, 51/98-ST and 1/2001-ST), while for UN and other International
Organizations a general exemption is available under Not. No.16/2002-ST. It
was observed that the present service tax exemption scheme to foreign
missions/ consulates and their personnel is selective and is not flexible
enough to be useful for negotiations with other countries, to the extent of
providing or modifying the tax concessions on reciprocal basis. It was also
noted that a relatively flexible exemption system is available in respect of
excisable goods vide serial No. 81 of Notification No. 6/2006-CE dated 1/3/06,
and therefore, it may be preferable to modify the service tax exemption scheme
in the same pattern.
02.
The issue has been further examined and it has been decided to
prescribe the scheme for service tax exemption in similar lines to the excise
exemption, with required modifications. The scheme would now operate through
two notifications, which would come into effect from 23.5.2007. Notification
No 33/07-ST dated23.5.2007 exempts all taxable services provided to foreign
diplomatic missions or consular posts in India for their official use, while
notification No. 34/07-ST dated 23.5.2007 exempts all taxable services
provided to diplomatic mission agents or career consular officers posted in a
foreign diplomatic missions or consular posts in India for their personal use.
The conditions to be followed and the procedure to be observed for availing
these exemptions are detailed in the following paragraphs.
3.1
CONDITIONS: The exemption
would be available on the taxable services provided to such foreign diplomatic
mission or consular post in India for its official use, which is issued with
an entitlement certificate (with or without any conditions) on the principle
of reciprocity, by the Protocol Division of the Ministry of External Affairs
(MEA).
3.2
PROCEDURE:
STEP 1.- ISSUANCE OF CERTIFCATE BY MEA
The
Protocol Division of the MEA may issue a certificate entitling a foreign
diplomatic mission or consular post in India, to receive tax free services
for their official use based on the principle of reciprocity. The
certificate would remain valid, till it is withdrawn, modified, annulled
by MEA;
The
head of the mission/consular post after receiving such certificate, would
communicate to the MEA the name and the specimen signature of the person
(which may be either the head of the mission/ consular post or a person
posted in such office and has been authorized by the head of the mission)
who would authenticate the copy of the certificate and issue an
undertaking in original for that mission or consulate. Such undertaking
will bear a running S. No.
commencing from the beginning of a financial year.
STEP 2.- AVAILMENT OF EXEMPTION
The
head of such foreign diplomatic mission or consular post (or the person
authorized by him) would issue, a copy of such certificate duly
authenticated by him along with a signed undertaking, bearing running
serial number and stating that the services received are for official use
of the said foreign diplomatic mission or consular post, to the service
provider /person liable to pay service tax (but for this exemption). Based
on such certificate and undertaking, tax free service would be provided by
the provider of taxable service.
The invoice issued by the service provider would bear the reference numbers of undertaking.
STEP 3.- VERFICATION OF THE CORRECTNESS OF AVAILMENT OF EXEMPTION.
The
authorized person of foreign diplomatic mission or consular post shall
maintain an account of such undertakings issued during a financial year so
that in case of audit verification or preventive checks, or in case where
the bonafides of any document or transaction is, prima-facie, in doubt,
the accounts of service provider (who would claim exemption) can be cross
checked (through the Protocol Division of MEA) with these records.
The
service provider shall retain the authenticated copy of the certificate
and the undertaking (in original) for future verification.
In
case there is reason to believe that the scheme is being misused or that
the bonafides of any certificate is prima facie in doubt and it is
necessary to compare the signature of the authorized person appearing on
such certificate or the undertaking, the same can be done by comparing
with the specimen signature available with the Protocol Division of MEA.
If
in future the Protocol Division withdraws such facilities, it shall
communicate to the foreign diplomatic mission or consular post of such
withdrawal. The Protocol Division would also inform the Department of
Revenue (Commissioner of Service Tax, Central Board of Excise and Customs,
North Block, New Delhi) about such withdrawal.
The benefit contained in this notification shall not be available from the date of withdrawal of such certificate.
4.1
CONDITIONS:
(a)
The exemption would be available on the taxable services provided to such
diplomatic agent or career consular officer working in a foreign diplomatic
mission or consular post in India for his personal use or for the use of their
family members, who is issued with an entitlement certificate (with or without
any conditions) on the principle of reciprocity, by the Protocol Division of
the Ministry of External Affairs (MEA).
(b) Such agent or officer should also hold a photo-identification-card bearing a unique serial number, issued by the Protocol Division of MEA or the Protocol Department of the State concerned.
4.2
PROCEDURE:
STEP 1.- ISSUANCE OF CERTIFCATE BY MEA
The
Protocol Division of the MEA may issue a certificate that the diplomatic
agents or career consular officers working in a foreign diplomatic mission
or consular post in India, are entitled to receive tax free services for
their personal use or for the use of their family members based on the
principle of reciprocity. The
certificate would remain valid, till it is withdrawn, modified, annulled
by MEA;
The
head of the mission/consular post would communicate to the MEA the name
and the specimen signature of the person (which may be either the head of
the mission/ consular post or a person posted in such office and has been
authorized by the head of the mission) who would authenticate the copy of
the certificate and issue undertakings in original for the agents or
career consular officers working in such diplomatic mission or counselor
post in India.
STEP
2.- AVAILMENT OF EXEMPTION
The
head of such foreign diplomatic mission or consular post (or the officer
authorized by him) would issue, (i) a copy of such certificate duly
authenticated by him; (ii) a signed undertaking, bearing a running serial
number, the unique serial number of the
identification card issued by MEA to the officer
and stating that the services received are for personal use of the
said agent or career consular officer or for use by his family members;
and (iii) a photocopy of such identification card, duly authenticated by
him to the service provider /person liable to pay service tax (but for
this exemption). Based on such certificate, undertaking and copy of
identification card, tax free service would be provided by the provider of
taxable service.
The
invoice issued by the service provider would bear the reference number of
undertaking and the unique serial number of the identification card.
STEP 3.- VERFICATION OF THE CORRECTNESS OF AVAILMENT OF EXEMPTION.
The
authorized person of foreign diplomatic mission or consular post shall
maintain an account of such undertakings issued during a financial year so
that in case of audit verification or preventive checks or in case where
the bonafides of any document or transaction is, prima-facie, in doubt,
the accounts of service provider (who would claim exemption) can be cross
verified (through the Protocol Division of MEA) with these records.
The
service provider shall retain the authenticated copy of the certificate,
the undertaking (in original) and authenticated photocopy of
identification card, for future verification.
In
case there is reason to believe that the scheme is being misused or that
the bonafides of any certificate is prima facie in doubt and it is
necessary to compare the signature of the authorized person appearing on
such certificate or the undertaking, the same can be done by comparing
with the specimen signature available with the Protocol Division of MEA.
If in future the Protocol Division withdraws such facilities or
identification card, it shall communicate to the foreign diplomatic
mission or consular post, of such withdrawal. The Protocol Division would
also communicate to the Department of Revenue (Commissioner of Service
Tax, Central Board of Excise and Customs, North Block, New Delhi) about
such withdrawal.
The
benefit contained in this notification shall not be available from the
date of withdrawal of such certificate.
Yours
faithfully,
(Gautam
Bhattacharya)
Commissioner
(Service Tax)
C.B.E.C,
New Delhi
Copy
for information, to,-
(1)
Director General (Service Tax), Mumbai
(2)
Chief Commissioners of Central Excise and Service Tax( (ALL)
(3)
Commissioners of Service Tax (ALL)