In your case, payments have to be made on the completion of specified events (milestone payments). Therefore, the taxable event (point of payment of tax) shall be on the completion of the event.

Ours is a branch office of an overseas entity. Currently we are providing marketing services in India for our overseas entity. On the conclusion of a review, it was suggested that such services shall be liable to service tax. We are currently not registered under service tax. Please clarify.

Under the taxable category of business auxiliary service, promotion or marketing of products/services provided by the client shall be liable to tax. It is pertinent to note that such services are liable to tax in case they are being provided to a client i.e. a separate legal entity.

Since yours is a branch office of the overseas entity, it may not be regarded as a legal entity separate from the overseas company. Therefore, service tax shall not be applicable on the marketing services provided by the branch office.

We are a manufacturing unit looking for diversification into manufacture and export of heavy machinery and tools for forging and presses. However, we are unaware of the duty exemption schemes/benefits available under the Foreign Trade Policy for import of capital goods. Kindly assist.

Under the zero duty EPCG scheme of the Foreign Trade Policy, an exporter of engineering products shall be eligible to import capital goods at nil rate of Customs duty. The zero duty EPCG scheme shall be in operation up to March 31, 2012.

However, the authorities may adopt a different view on the interpretation of the definition of engineering products and may, therefore, deny the benefit under the zero duty EPCG scheme. Alternatively, you may opt for the 3% duty EPCG scheme.

Please note that under the zero duty EPCG scheme, the export obligation shall be six times the duty saving, to be fulfilled in the six years. Under the 3% duty EPCG scheme the export obligation shall be eight times the duty saving, to be fulfilled in the eight years.

We are in the business of providing erection and installation services under contract to various industries. We believe that a circular has been issued by the service tax department regarding classification of service in the nature of works contracts. In case of contracts entered into prior to June 2007, which shall be the taxable category? Kindly also assist on the applicability of composition scheme on such long-term works contracts.

The taxable category of works contract service was introduced on June 1, 2007. In accordance with the circular, services like erection, commissioning and installation (that are essentially in the nature of works contract) that were being provided prior to June 1, 2007 and are subsisting beyond that date shall be classified as a works contract service.

In case a works contract had commenced prior to June 1, 2007 and the service tax payment is also made before June 1, 2007, the composition scheme would not be available. In case a works contract was entered into before June 1, 2007 but payment of service tax had not been made until June 1, 2007, then the assessee would be eligible to choose the composition scheme.