No service tax for lobbying

CHATROOM

All other promotional activities will be considered Business Auxiliary Services.

TNC Rajagopalan will answer questions from readers on SME-related issues pertaining to taxes, exim policies or registrations/reservations, etc. Readers can now send mails to smequeries@business-standard.com

We are manufacturers of electrical control panels. We have an export order. We need to import some components for making the panels as per customer specification. We do not find any Standard Input Output Norms (SION) to cover all the items required by us. How we can proceed in such situations?

SION no. C 190 covers Electrical Control Panels but it deals mainly with the requirement of CRCA sheets/cuttings/coils/defective/secondary to construct the Panels made of CRCA sheets. General Note no. 4 for Engineering Products, however says that :

"For import of components, in respect of export product

(a) where norms have not been standardised and published and the applicant seeks to import only components (without any raw material, consumables, etc.), or

(b) where SION do not provide import of components, or

(c) where additional components in addition to those allowed in norms are sought, the components as an input may be allowed for import on net-to-net basis, without any wastage, by the licensing authority. Import of components sought as spares shall be governed by the policy for spares.

In such situations, the import of components allowed shall be permitted with accountability clause and the type, technical specifications (including part no. if any), etc. of the components sought for import should conform to those utilised in the manufacturing of the resultant product, which should be reflected in export documents ( shipping bills) also. A condition to this effect shall be imposed in the license."

So, you can apply to the licensing authority for issue of advance license for duty free import of components as per the above General Note no. 4. You must, however, take note to file correct declaration in the shipping bills showing utilization of the duty free inputs in the export product.

We are Delhi based liaison agents. For our parties, we get various things done from the Government, Public Sector Undertakings, etc. Our clients pay us fees for liaison work, which covers our office and other expenses also. Recently, we were advised to register and pay service tax under the category Business Auxiliary Services. What is the correct position?

If you are rendering any service in relation to promotion or marketing or sale of goods produced or provided by or belonging to the client or any service in relation to promotion or marketing of service provided by the client or any service in relation to any customer care service provided on behalf of the client, the service you render will be covered under business auxiliary services.

Any service incidental or auxiliary to any of the above activities, such as collection or recovery of cheques, payments, evaluation or development of prospective customer or vendor would also fall within the ambit of business auxiliary services.

Only liaison work such as say lobbying to influence policies or decisions or to expedite certain files will not attract service tax so long as the work is not in relation to any of the above mentioned activities.