The government has issued notification 42/2012 – ST, DATED 29-6-2012 by which service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him has been made exempt.
A perusal of the said notification brings following conditions which must be satisfied in order to claim exemption
(1) The exporter shall declare the amount of commission paid or payable to the commission agent in the shipping bill or bill of export, as the case may be.
(2) The exemption shall be limited to the service tax calculated on a value of ten per cent of the free on board value of export goods for which the said service has been used.
(3) The exemption shall not be available on the export of canalised item, project export, or export financed under lines of credit extended by the Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary.
(4) The exporter shall submit with the half-yearly return after certification of the same as specified in clause (g) of the proviso—
(i) the original documents showing actual payment of commission to the commission agent; and
(ii) a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods outside India:
(5) Exporter informs the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory or the regional office or the head office, as the case may be, in Form EXP3 appended to this notification, before availing the said exemption;
(6) Exporter is registered with an export promotion council sponsored by the Ministry of Commerce or the Ministry of Textiles, as the case may be;
(7) Exporter is a holder of Import-Export Code Number;
(8) Exporter is registered under section 69 of the said Act;
(9) Exporter is liable to pay service tax under sub-section (2) of section 68 of said Act, read with item (G) of sub-clause (i) of clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules,1994, for the specified service;