Liability to pay service tax on upfront fees on external commercial borrowings

[Apurba Biswas]

Liability to pay service tax on upfront fees/processing fees paid to overseas bank (Foreign branch of ICICI Bank and State Bank of India) for sanction of external commercial borrowings(ECB) - Whether head office of ICICI Bank/SBI or recepient of ECB.

AI Summary

Import of service: recipient of cross border bank processing fees must register and pay service tax on the imported service.
Liability for service tax on upfront/processing fees paid to overseas bank branches for sanctioning external commercial borrowings arises from classification as import of service; foreign branches are separate persons for service tax purposes and the Indian recipient is required to register and pay service tax on the imported service under the statutory framework including Section 66A.