The CESTAT held that Indian banks acting as recipients of...

The CESTAT held that Indian banks acting as recipients of services for foreign bank charges in export transactions are not liable to pay service tax under the Reverse Charge Mechanism. The Tribunal relied on prior coordinate bench decisions establishing that Indian banks do not receive taxable services from foreign correspondent or intermediary banks in such transactions. Consequently, the demands for service tax, along with interest and penalties, imposed on the appellant were found to be unsustainable in law. The impugned order was set aside, and the appeal was allowed, absolving the appellant from the liability to pay service tax on foreign bank charges related to export remittances.

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