2014 (9) TMI 544 - AT - Service Tax

Tribunal grants exemption benefits to appellants for services by foreign entities under Notification No. 14/2004-ST.

M/s. KG. Denim Ltd. Versus CCE, Salem

The Tribunal ruled in favor of the appellants, granting them exemption benefits under relevant notifications and dismissing the service tax demands on ... Import of services - Business Exhibitions conducted abroad - Technical Inspections were done outside India - payments have been made by the appellants to parties located abroad - Held that:- Since, these services are performed outside India there is no service tax liability on the services in view of the above provisions. - Decided in favor of assessee. Processing of Textile materials for chemical wash - Held that:- On scrutiny of the records of the appellants, it was noticed that the appellant had paid the amount towards ‘processing of textile materials for chemical wash’ charges to M/s. Testex, Swiss, Glancario and Reni Hendriks, Holand. So, there is no dispute of the fact that the appellant paid the charges for textile processing. Hence, they are eligible for exemption benefit under Notification No. 14/2004-ST dated 10.9.2004, as amended - Demand set aside - decided in favor of assessee. Issues Involved:1. Service tax demand on charges paid to foreign service providers for various services.2. Tax liability under Business Exhibition service and Technical Inspection and Certification Service.3. Exemption benefit under Notification No. 14/2004-ST for processing of textile materials for chemical wash.Analysis:Issue 1: Service tax demand on charges paid to foreign service providersThe appellants were engaged in the manufacture and export of readymade garments. A demand of service tax amounting to Rs. 16,11,753/- was raised for the period from 18.4.2006 to 12/2008 on charges paid to foreign service providers for various services. The Tribunal examined the records and found that the appellants had indeed paid the charges for the services, leading to the conclusion that they were eligible for the exemption benefit under Notification No. 14/2004-ST dated 10.9.2004.Issue 2: Tax liability under Business Exhibition service and Technical Inspection and Certification ServiceIn the case of Business Exhibition service and Technical Inspection and Certification Service, the Tribunal referred to a previous Final Order where it was established that services performed outside India by foreign service providers do not attract service tax liability as per the provisions of Taxation of Services Rules, 2006. The Tribunal noted that since the services were conducted abroad and payments were made to parties located abroad, they were considered as imported services into India, exempting them from service tax liability.Issue 3: Exemption benefit under Notification No. 14/2004-STRegarding the demand of tax on processing of textile materials for chemical wash under Business Auxiliary Service, the appellants claimed exemption under Notification No. 14/2004-ST dated 10.9.2004. The Tribunal observed that the appellants had paid the charges for textile processing to foreign entities, making them eligible for the exemption benefit under the said notification. The Tribunal allowed the appeal filed by the appellant, setting aside the impugned order and granting consequential benefits.In conclusion, the Tribunal ruled in favor of the appellants, granting them exemption benefits under the relevant notifications and dismissing the service tax demands on services provided by foreign entities.