TaxTMI 
TaxTMI 
2024 (12) TMI 948
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....ufacture and export of knitted garments to overseas customers were utilizing the services of M/s. AMSCO Finance Ltd. (AML) and Foreign Banks located abroad for realisation of export proceeds. It was alleged that the Appellant had made payments for such services received from AFL by way of deduction of service fee @ 3% from the export bills and in respect of foreign banks, by specified charges deducted from their export proceeds realisation. Hence the department was of the view that the Appellant was liable to pay service tax on reverse charge basis on the banking and financial services received from AFL and foreign banks, located in a non-taxable territory in terms of Section 66A of the ACT ibid read with Rule 3(ii) of Taxation of Services (Provided from Outside India )Rules, 2007 and Rule 3 of Place of Provision of Service Rules 2012. 2.2 Consequently, a Show Cause Notice No. 24/2013 dated 24.10.2013 was issued to the Appellant seeking to demand Service Tax of Rs.72,26,765/- and Rs.4,74,485/- on the amounts paid to AML and Foreign Banks respectively, for the period from 2008-09 to 2012-13 along with applicable interest and to impose penalties under Section 76,77 & 78 of the ACT i....
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.... excludes transaction in money. As the amount of remittance comprises money, the activity does not comprise a 'service' and thus not subjected to service tax. 3. In case any fee or conversion charges are levied for sending such money they are also not liable to service tax as the person sending the money and the company conducting the remittance are located outside India in terms of the Place of Provision of Services Rules such services are deemed to be provided outside India and thus not liable to service tax. 4. It is further clarified that even the Indian counterpart bank or financial institution who charges the foreign bank or any other entity for the services provided at the receiving end, is not liable to service tax as the place of provision of such service shall be the location of the recipient of the service, i.e. outside India, in terms of Rule 3 of the Place of Provision of Services Rules, 2012". vi. It was contended that the impugned order had wrongly concluded that the Appellants were service recipients which was factually incorrect as the buyer had engaged the bankers for transfer of proceeds of sale to the Appellants less the amount discounted towards bills rai....
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....orted goods owed by the foreign buyer to the appellant? 8. We find that the impugned order has confirmed demand of service tax on two counts, both under one taxable service viz., Banking and Financial Services. These demands have been confirmed alleging that the appellants are liable to pay the service tax on reverse charge mechanism in terms of the provisions of Section 66A of the Finance Act, 1994 for the services received from outside India. The first one is the demand with regard to the services received by the appellants from AFL, Hong Kong during the course of realization of export proceeds which includes 3% fee and specified charges for transfer of money to the account of the appellants. The second one is demand of service tax on various specified charges deducted by the foreign banks from the sale proceeds of the exports made by the appellants for transferring the foreign exchange to the accounts of the appellants maintained in India. 9. We find that the identical issues as involved in the present case, were also involved in the case of M/s. AKR Textiles and Others Vs. Commissioner [2020 (10) TMI 479 CESTAT CHENNAI] wherein Chennai Tribunal has allowed 22 appeals of the e....
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....oreign banks which would be providing services. Exporter or importer in India does not have any formal or informal agreement with the foreign bank, importer or exporter in India does not even know the quantum of charges which the foreign bank would be recovering. Therefore, in view of the above mentioned factual position and also in view of the various articles of URC 522/UCP 600, it is clear that services are provided by 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-1 -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.)]." Similar issue was considered by the Tribunal in the case of Greenply Industries Ltd. (supra). The relevant portion is reproduced as 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. T....
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....islative change, it would appear that the intent was limited to 'chit funds' as seen from 'Reserve Bank of India has clarified that the business of a chit fund is to mobilize cash from the subscribers and effectively cause movement of such cash to keep it working and, therefore, the activity of chit funds is in the nature of cash management.' thus negating the recourse to section 65(105)(zm) as taxable service for which appellants were liable till 30th June 2012. On the other hand, this may have the scope of inclusion within the taxable service as 'bill discounting' for which exemption is afforded by notification no. 29/2004-ST dated 22nd September 2004 when provided to customers. As a customer of the provider of the service is not, under the notification, required to be an account holder, the benefit of such exemption is not deniable to the appellants. 7. For the period after 1st July 2012, the finding in the impugned order that '20. For the period from 1st July 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 u....
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....evolved till then were embedded in the new scheme of Finance Act, 1994, as section 66B, 66C, 66D and 66E, to resonate with '(44) ...any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - ..' assigned to 'service' in section 65B of Finance Act, 1994 not only to cover all 'activities' save those exogenic to, and excepted in, the definition but also those excluded out of, and exempted from, levy in 'negative list' or by notification. Also, here the expression 'for another', as substitute for 'to any person', eliminates the erstwhile touchstone of 'recipient' for determination of the rendering of service and thus conflates the definition and 'service' in its essential form; resort to 'recipient' was henceforth restricted to situations, specifically articulated, where such recognition is necessary for harmony with the charging provision. In the new scheme of tax, 'consideration', as also the 'provider', continued to be no less vital than before for discerning the service transaction even as 'recipient', with the obliter....