Power to notify services or circumstances – Rule 13 of Place of Provision of Services Rules, 2012

What is the implication of this Rule?

This Rule states as follows:-

“In order to prevent double taxation or non-taxation of the provision of a service, or for the uniform application of rules, the Central Government shall have the power to notify any description of service or circumstances in which the place of provision shall be the place of effective use and enjoyment of a service.”

The rule is an enabling power to correct any injustice being met due to the applicability of rules in a foreign territory in a manner which is  inconsistent with these rules leading to double taxation. Due to the cross border nature of many services it is also possible in certain situations to set up businesses in a non-taxable territory while the effective enjoyment, or in other words consumption, may be in taxable territory. This rule is also meant as an anti-avoidance measure where the intent of the law is sought to be defeated through ingenious practices unknown to the ordinary ways of conducting business.


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