Tribunal rules in favor of manufacturer on service tax dispute

The Tribunal set aside the order demanding service tax under 'Banking and Other Financial Services' for the period from 1.4.2007 to 31.5.2012. The appellant, a manufacturer of textile products, argued that the amount deducted by foreign banks towards banking charges should not be taxable as no services were received in India. The Tribunal held that since the appellant was not directly dealing with the foreign banks and the service was rendered to the Indian bank, it was not subject to service tax. The appeal was allowed, and the tax demand was dismissed.

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Issues involved: Taxability of amount deducted by foreign banks towards banking charges under 'Banking and Other Financial Services' for the period from 1.4.2007 to 31.5.2012.

Summary:
The appeal was filed against an Order in Appeal passed by the Commissioner of Central Excise (Appeals), Salem, demanding service tax, interest, and penalties from the appellant, a manufacturer of textile products exporting to various countries. The appellant received lesser amounts than due from foreign banks for export proceeds, leading to a Show Cause Notice for non-payment of service tax under 'Banking and Other Financial Services.' The original authority confirmed the tax demand and penalties, which was upheld by the Commissioner (Appeals), prompting the appellant to approach the Tribunal.

The main issue revolved around whether the amount deducted by foreign banks towards banking charges was taxable under the service 'Banking and Other Financial Services' during the mentioned period. The appellant argued that since no services were received in India, it should not be considered a taxable service, citing relevant case laws. The Tribunal referred to similar cases and held that the appellant was not directly dealing with the foreign banks, and the service was rendered to the Indian bank, thus not subject to service tax. Consequently, the impugned order demanding service tax was set aside, and the appeal was allowed.

In conclusion, the Tribunal found that the issue was no longer res integra and had been resolved by previous Tribunal orders. Therefore, the impugned order demanding service tax under 'Banking and Other Financial Services' was set aside, and the appeal was allowed with consequential relief, if any, as per law.

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