TaxTMI 
TaxTMI 
2023 (11) TMI 168
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder in original held as follows: A. 27/Additional Commissioner /Noida/2012-13 dated 26.09.2012 1. I hereby confirm the demand of service tax amounting to Rs 8,89,477/- (Rupees eight lakh eighty nine thousand four hundred and seventy seven only) against M/s Samsung Electronics India Pvt. Ltd. B 1 Sector 81 Phase II Noida under section 73 (1) of the Finance Act, 1994. 2. I order to recover the above confirmed dues along with appropriate rate of interest as provided under section 75 of the Finance Act, 1994. 3. I also impose penalty of Rs 8,89,477/- (Rupees eight lakh eighty nine thousand four hundred and seventy seven only) upon M/s Samsung Electronics India Pvt. Ltd. B 1 Sector 81 Phase II Noida under section 76, 77 & 78 of the Finance Act, 1994. B. 11/2013-14/Asst Commr/NOIDA-III dated 17.04.2014: 1. The demand of service tax for Rs. 3,19,058/- (Rupees Three Lac Nineteen Thousand & Fifty Eight only) as demanded under impugned SCN for the period 2010-11 & 2011-12, U/s 66(A) read with proviso to section 73 (1) of Finance Act, 1994 is hereby confirmed. However on payment of total dues as adjudged hereto, the party may be eligible for Cenva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....10.2011 was issued to the appellant asking them to show cause as to why: 1. Service tax amounting to Rs 8,89,477/- (Service tax amounting to Rs 8,66,280/- plus Edu Cess amounting to Rs 17,326/- plus HSEC amounting to Rs 5872/-) on the taxable amount of Rs 74,35,000/- paid to foreign banks in foreign currency on account of interest/ bank charges for the period from April 2006 to March 2010 should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994. 2. Interest on delayed payment of service tax should not be demanded and recovered under section 75 of the Finance Act, 1994 3. Penalty should not be imposed upon them under section 76, 77 & 78 of the Finance Act, 1994, for the contravention of the provisions of finance Act, 1994/ Rules ibid. 2.5 Demand cum notice to show cause dated 18.10.2012 was issued to the appellant for the subsequent period asking them to show cause as to why: 1. Service tax amounting to Rs 3,19,058/- (Service tax amounting to Rs 3,09,764/- plus Edu Cess amounting to Rs 6,196/- plus HSEC amounting to Rs 3,098/-) on the taxable amount of Rs 30,97,645/-/- paid to foreign banks in foreign currency on accou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s along with the submissions made in appeal and during the course of arguments. 4.2 As the issue involved in both the appeals is same we are referring to the impugned order dated 25.12.2015 for further discussions. Impugned order observes as follows: "At the outset, the issue to be decided by the appellate authority is whether the expenditure in foreign currency incurred by the appellants towards "corbank" charges paid to foreign bank (intermediary bank) stationed outside the country, but channelized through applicant's Indian Bank 9Bank of America), who engages the foreign bank, would be liable to Service Tax under Reverse Charge Mechanism as provide under Section 66A of the Finance Act, 1994. The main contention by the adjudicating authority is that the appellant has received banking & Other Financial Services from the foreign bank and appellant has made payments in foreign currency to the foreign banks towards banking/ "corbank" charges. The adjudicating authority has stated that the said foreign bank has no office in India, hence the appellant, being the receiver of services from the foreign bank, is liable to pay service tax on the said services under "Banking & Other Fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erefore the appellant is liable to pay service tax in terms of section 66A of the act." 4.3 Following has been clarified as per Trade Notice No 20/2013-14 dated 10.02.2014 of Commissioner Service Tax -I Mumbai: "During verification of the records of some of the banks, it has been noticed that, in the case of export and import transactions, where foreign exchange is required to be received in the country or to be remitted, the foreign banks charges a commission/fee from the bank in India, but no Service Tax is being paid thereon. These foreign banks are those with whom the importer or exporter in the foreign country holds a bank account or the said foreign bank is providing some services in relation to forwarding of documents and realisation of proceeds by way of remittances of money. As per the law, Service Tax is required to be paid by the recipient of services in India, in cases where services are provided by a foreign person. In order to examine the factual and legal position, a meeting of major banks along with representatives of Indian Banks' Association (IBA) and Foreign Exchange Dealers' Association of India (FEDAI) was held and their views were taken. After examin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the banks, it was noticed that some of the banks are affixing stamps on documents stating that the said transactions of forwarding of documents and realisation of proceeds by way of remittances of money are subject to URC 522/UCP 600. The banks in India appears to be following URC 522/UCP600 for transactions of forwarding of documents and realisation of proceeds by way of remittances of money. 4. In order to understand the obligations of the foreign banks, the banks in India and importer/exporter, the said URC 522/UCP 600 were examined. Article Nos. 4, 8, 10, 11, 16, 21, 26 of URC 522 and Article Nos. 3, 4, 7, 8, 9, 13, 37 of UCP 600, read with other relevant Articles in these two brochures are relevant for the present issue. A combined reading of these Articles shows that there is an implied contract between a bank in India and a foreign bank, whereby, the foreign bank recognizes only the Bank in India for providing their services and for collection of their charges. In case of any clarification on any issue regarding their activity, there is always correspondence between the foreign bank and the bank in India. Even the amount of charges collected by foreign bank is informed on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Service Tax, Ahmedabad - 2013 (30) S.T.R. 667 (Tri.-Ahmd.)]." In the above clarification it has been clarified that the Indian Exporters are not the recipient of services from the Foreign Bank/ intermediary bank. As Indian Exporter's as per the above clarification are not receiving any ser5vices from the foreign bank/ intermediary bank, the entire foundation on which this demand has been made and upheld is demolished and the impugned orders need to be set aside only on this ground. 4.4 In case of Theme Exports Pvt. Ltd. [2019 (26) G.S.T.L. 104 (Tri. - Del.)] following the earlier decision in case of Dileep Industries, Delhi Bench held as follows: "4. We find that the issue arising out of present dispute is no more res integra, in view of the decision of this Tribunal in the case of M/s. Dileep Industries Pvt. Ltd. v. CCE, Jaipur - 2017 (10) TMI 1231 - CESTAT, New Delhi. The relevant paragraphs in the said decision are extracted herein below :- "4. After hearing both the parties and on perusal of record, it appears that the first issue is pertaining to the collection charges of the Indian bankers who in turn send the same to the appellant for collection to the fore....