TaxTMI 
TaxTMI 
2024 (5) TMI 417
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.... 49,51,910/- 3. ST/42267/2017 April 2014 to March 2015 11.03.2016 32,09,862/- Since the issues involved in all these appeals are identical, therefore, all the three appeals are taken up together for discussion and decision. For the sake of convenience, we may take the facts of the Appeal No. ST/40637/2015 as a lead case. 2.1 Briefly stated facts of the case are that the appellant is a private limited company incorporated in the year 2005 and has been engaged in manufacture and export of knitted garments to various buyers located abroad i.e. M/s C&A Buying GMBH & Co., Germany (hereinafter referred to as "M/s C&A") and M/s Gap International, USA. 2.2 The information gathered by the department indicated that the appellant has been paying service fee to an intermediary for collection of the payments relating to their goods exported to M/s C&A. The information also indicated that the foreign banks, transmitting the export sale proceeds to the account of the appellant, were also collecting service charges from them. To verify the service tax liability on the service fee paid to the intermediate agent and to the foreign banks, certain do....
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....e communication on 15.02.2008, as evident from the copy of the letter available on record. Therefore, it appears that the appellant has contractually agreed to avail the service of M/s Amsco for realization of the sale proceeds through Trade Payment Arrangement on payment of service fee equivalent to 3% of the purchase value of M/s C&A, which is deductible from the payment due for their invoices presented for collection. 2.7 It has further come to the knowledge of the department that Deutsche Bank, located in Singapore has been transferring the export proceeds received from M/s Amsco to the account of the appellant via db-ebills, an online mechanism. During this process the said bank has deducted their charges from the supplier invoice value towards their service like Telegraphic Transfer of export proceeds to the Indian account. In respect of the exports effected to buyers other than M/s C&A also, the appellant has been paying bank charges to the respective banks stationed abroad as is evident from the bank transaction advices. These banks have transferred the payments to the appellant's account held in the local banks. As per the foreign bill transaction ....
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....le basis to conclude that the impugned services were not liable to service tax and further, there was no intent to evade tax as the appellant had no contractual relation with either M/s Amsco or the foreign banks. All transactions such as payment, transmission of funds are the liability of M/s C&A and it is up to them to decide the mode of transfer and payment and the appellant had no role in this regard. The appellant also stated that mere non-disclosure does not tantamount to suppression of facts or willful mis-statement to evade tax. In support of their submissions, the appellant relied upon various judicial pronouncements of the Hon'ble Apex Courts as well as the High Courts. 2.11 After following the due process, the learned Commissioner confirmed the demand for the various periods along with interest and penalties as cited supra. Aggrieved by the said orders, the appellant preferred the present appeals. 3. Heard both the parties and perused the material on record. 4.1 The learned Counsel for the appellant submits that the impugned orders are not sustainable in law and are liable to be set aside, as the same have been passed without properly appreciating the fact....
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.... Account of the appellant in India. • Deutsche Bank makes the remittance to the account of the appellant on behalf of C&A. They deduct their service charge from the remittance to be made to the appellant. • Deutsche Bank is not contractually engaged by the appellant in any manner. • C&A terminated their agreement with Amsco from 20.01.2012 and thereon, C&A directly processed the payment of invoices and took the 3% deduction in the purchase value as discount. • Annexure-4 in Appeal No. ST/42267/2017 Letter from C&A intimating the above to the appellant. • Annexure-8 in Appeal No. ST/42267/2017 Payment realization advice evidencing remittance made directly by C&A and not by Amsco. 4.3 The learned Counsel further submits that the appellant is not liable to pay service tax on the services provided by M/s Amsco to M/s C&A because the agreement for processing payment due to the appellant by M/s C&A is between M/s C&A and M/s Amsco, and it is M/s C&A who has engaged M/s Amsco and not the appellant. M/s Amsco is not contractually obligated to provide any services to the appellant and the appellant is also not obligated to ....
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....A since 20.01.2012, because w.e.f. 20.01.2012, M/s C&A terminated the TPA with M/s Amsco and started processing the payments itself. Therefore, no demand of service tax on the ground that services provided by M/s Amsco can be raised for the period subsequent to the same. 4.10 He further submits that 3% deduction by the appellant from the purchase value was continued to be provided as discount even after the termination of TPA. 4.11 As regards the second issue that the appellant has received services from foreign banks that makes the payments of consideration owed by the foreign buyer to the appellant, the learned Counsel submits that the Deutsche Bank by remitting the payment to the appellant, provides no services to the appellant for following reasons: (i) There is no agreement between Deutsche Bank and the appellant for Deutsche Bank to remit the payment. (ii) Deutsche Bank is chosen by M/s C&A and not by the appellant. (iii) Deutsche Bank remits the payment required to be made by M/s C&A. (iv) The appellant is not under any obligation to make payment to Deutsche Bank. 4.12 He further submits that when the appellant is not the recipien....
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....idered the submissions made by both the parties and perused material on record; and also gone through the decisions relied upon by the appellant. According to us, only two issues are involved to be decided in the present case: (I) Whether the appellant has received payment processing services from M/s Amsco engaged by M/s C&A, the foreign buyer to process payments to the appellant. (II) Whether the appellant has received services from foreign banks that makes the payments of consideration owed by the foreign buyer to the appellant. 7.1 As regards the first issue, we find that there is no service provider-recipient relationship between the appellant and M/s Amsco and if there is any contract, the same is between M/s C&A (buyer) and M/s Amsco, both of whom are out of India and the appellant does not have any contract with M/s Amsco whatsoever. 7.2 We also find that the appellant is only a recipient of the funds for the goods sold to M/s C&A and the amount received is the net amount as per the invoice. 7.3 Further, we find that the deduction of 3% from the invoice price was already indicated in the Purchase Order for the goods issued by M/s C&A and therefore....
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....e, were also involved in the case of M/s AKR Textile and Others (supra) wherein Chennai Bench of this Tribunal has disposed of 22 appeals and allowed the appeals of the exporters by setting aside the impugned orders. It is pertinent to reproduce the relevant findings of the Tribunal in the above cited case, which is reproduced herein below: "5. It has been pointed out that the levy of tax on charges deducted by overseas banks, in identical situation, has been held by the Tribunal, in Rogini Garments and ors v. Commissioner of Customs, Central Excise & Service Tax, Coimbatore [final order no. 41819-41832/2017 dated 29th August 2017], to be unsustainable in law. On perusal of the said order at '6. The case of the department is that when the foreign bank deducts the charges towards transfer of foreign exchange to the Indian bank, since the same Is deducted from the sale proceeds, it is a service rendered by the foreign bank to the appellants and that there is a service provider and service recipient relationship between the foreign bank and the appellant. It is to be noted that the foreign bank deducts such charges and transfers the foreign exchange to the Indi....
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....s under: - 5. We have considered the submissions from both sides and perused the records. We find that no documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Moreover, we also find that in Appellant's own case for the previous period similar order had been passed by the original adjudicating authority and on appeal being filed against the same, the Commissioner (Appeals), vide order-in-appeal dated 12-112008 has set aside that order and as per the appellant's counsel, no appeal has been filed against that order, in view of this, the impugned order is not sustainable. The same is set aside and the appeal is allowed. 7. We have to say that the decision relied upon by the Id. AR in the case of Lupin Ltd. (supra), was rendered on 12.2,2013 which is much before the clarification issued....
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....2012: - Service tax demand related to M/s Amsco Finance Ltd; - It has been argued by M/s, AKR Textile that after the advent of negative regime, they are not liable to pay service tax under reverse charge. For which, they have reiterated what was already stated and quoted in Issue 1 discussion. The argument put forth were already considered and were rejected as not tenable. From the records available and as per the legal position and in view of the clarification given in the CBEC Education Guide, para 5.3.3, M/s. AKR Textile are receiving the Banking and Financial service rendered by M/s Amsco Finance Ltd., and they are person who is making the payment of service fee for the service received. M/s C& A is neither receiving the service of M/s Amsco Finance Ltd nor paying the payment. It is M/s. AKR Textile (who are having a permanent establishment in the taxable territory) who are making the payment actually, hence, they are liable to pay service tax under Section 68 (2) of the Finance Act, 1994 for the receipt of service from the non-taxable territory to the taxable territory i.e. in India. Further it Is held that it is not the mere transfer of money is involved the issue to....
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....e for discerning the service transaction even as 'recipient', with the obliteration of carefully crafted boundaries inherent to the definition of 'taxable services' by the generalized explication as the substituting of selfperformance, had ceased to be.' by the Tribunal in Sabre Travels Network India P Ltd v. Commissioner of CGST & Central Excise, Mumbai Central [final order no. A/85779-85783/2020dated 11th September 2020] which may be usefully referred to. 8. It appears to us that, while 'consideration' is passed from appellants to the overseas entity, it is the overseas customer who is, contractually, bound to repatriate value of exports to the appellant and, instead of doing so, authorises M/s Amsco Finance Ltd as delegate to effect that responsibility. It is not the contractual responsibility of the appellants to collect the dues and, therefore, by no stretch can it be held that the mediation of M/s Amsco Finance Ltd is a substitution for the task that would, otherwise, fall to the appellants. If at all, the Hong Kong entity is an 'intermediary' within the meaning assigned in Place of Provision of Service Rules, 2012 to render the service, it has been performe....