What is the significance of “Location” of a Service Provider or Receiver for determining taxing jurisdiction?
In terms of explanation (2) to sub-section 44 of section 65B, an establishment of a person outside the taxable territory is a person distinct from an establishment in a taxable territory. Thus, services provided from overseas are to be carefully judged whether they are being rendered by the establishment outside the taxable territory or within.
Similarly, from the taxpayer’s perspective the jurisdiction of the field formation, which is relevant for compliance with registration formalities, filing of returns, refund claims etc. by the person liable to pay tax (provider or receiver as the case may be), will be the “location” as determined in terms of these rules.
How will such “location” be determined?
The location of a service provider or receiver (as the case may be) is to be determined by applying the following steps sequentially:
A. where the service provider or receiver has obtained only one registration, whether centralized or otherwise, the premises for which such registration has been obtained;
B. where the service provider or receiver is not covered by A above:
i. the location of his business establishment; or
ii. where services are provided or received at a place other than the business establishment i.e. a fixed establishment elsewhere, the location of such
iii. where services are provided or received at more than one establishment, whether business or fixed, the establishment most directly concerned with the provision or use of the service; and
iv. in the absence of such places, the usual place of residence of the service provider or receiver.
It is important to note that in the case of a service receiver, the place relevant for determining location is the place where the service is “used” or “consumed”.