TaxTMI 
TaxTMI 
2023 (11) TMI 168
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....Commr/NOIDA-III 17.04.2014 1.2 Original authorities have by their order 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 ....
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....ess and Higher Secondary Education Cess) of Rs 8,89,477/- was payable but not paid by the Appellant. 2.4 A show cause notice dated 24.10.2011 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/- p....
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.... dated 10.02.2014, clarifying that these payments cannot be subjected to service tax. 3.3 Arguing for the revenue learned authorized representative reiterated the findings recorded in the impugned orders. 4.1 We have considered the impugned orders 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....
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.... foreign currency. Thus I am of the opinion that the services provided by foreign bank to the appellant fall under the Banking & Other Financial Services and since the said service was provided from a foreign land to a client based in India, the appellant can be treated as receiver of services from a foreign service provider & therefore 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 th....
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....provide Articles containing terms and conditions which are binding on all the parties subscribing to them. Thus, the need for agreements between banks is superfluous, as they subscribe to the URC 522 and UCP 600, and only the rates of charges need to be periodically fixed. 3. While going through sample import-export documents obtained from 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....
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.... the foreign bank to the bank in India. Further, Tribunals have also prima facie held that in such cases, services are provided by the foreign bank to the Indian bank and not to the Indian Exporter. [M/s. Gracure Pharmaceuticals Ltd. v. Commissioner of Central Excise, Jaipur-I - 2013 (32) S.T.R. 249 (Tri.-Del.), M/s. Gujarat Ambuja Exports Ltd. v. Commissioner 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 In....