Reverse charge service tax on foreign bank charges fails absent proof of service, consideration, and privity of contract.

Foreign bank charges deducted from export remittances were held not taxable in the assessee's hands under reverse charge because the department failed to prove a taxable service rendered to the assessee. No agreement, invoice, bill, privity of contract, or other material established a service-provider and service-recipient relationship, consideration, or nexus between the foreign banks and the assessee. The demand could not rest on assumptions or the mere fact that charges were deducted while transmitting export proceeds; service tax liability required evidence of a service performed for the person sought to be taxed.

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Issues: Whether the amounts deducted by foreign banks towards bank charges from export proceeds remitted to the assessee's Indian bank account were exigible to service tax in the assessee's hands under reverse charge.

Analysis: The demand was founded on an assumption that the foreign banks rendered a taxable service to the assessee, but no agreement, invoice, bill, or other material was produced to show a service-provider and service-recipient relationship between the assessee and the foreign banks. Service tax liability cannot rest on presumptions; the taxable event must be supported by evidence of a service performed for consideration and a corresponding nexus between the service provider and the person sought to be taxed. The record also did not establish any privity of contract between the assessee and the foreign remitting bank, nor did it show that the assessee was the recipient of the alleged banking service. The deduction of charges while transmitting export proceeds did not by itself establish that the assessee was liable under reverse charge.

Conclusion: The issue is decided in favour of the assessee, and the foreign bank charges deducted from export remittances are not taxable in the assessee's hands under reverse charge.

Ratio Decidendi: A service tax demand under reverse charge requires proof of a taxable service rendered for consideration to the person proceeded against; in the absence of evidence of privity, nexus, and agreed consideration, liability cannot be fastened on assumptions.

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