TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 10
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....2. The appellant appears to have given a discount on the gross value of the exports which was reflected in the invoice raised by the appellant as well and hence, appellant received 97% of the gross value of the export in its bank account (Bank of Maharashtra). The said 3% was in fact retained by AFL as its fees. Deutsche Bank also deducted the processing fees out of the amount paid to the appellant. The said 3% was considered by the Revenue as the charges/fees for Banking and Financial Services and hence, the appellant was liable to pay Service Tax on the said amount on Reverse Charge Mechanism. The same was proposed and communicated in the form of Show Cause Notice 24.10.2013 and it appears that the appellant filed its reply for the charges/proposals made in the SCN. But however, the Original Authority having considered the same in adjudication, vide Order-in-Original No39/2014 dated 26.12.2014, proceeded to confirm the proposals made in the Show Cause Notice. The said demand in the Order-in-Original has been assailed in this appeal by the appellant. 3. Heard Dr. S. Sathianarayanan, Ld. Advocate for the Appellant and Smt. O.M. Reena, Ld. Additional Commissioner for the Revenue; w....
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....uated in India. By no stretch of imagination can such foreign bank be considered as a service provider for the appellant who in most cases would not even be aware of the identity of such foreign bank. The act of deduction of an amount as charges for transfer of the foreign exchange to the Indian bank from the sale proceeds of the appellant is only a facility for collecting such charges from the Indian bank. This cannot be considered as payment of charges for services by the appellant to the foreign bank. It is actual charges deducted being bank to bank transaction. The department by the Trade Notice dated 14.2.2014 has clarified the very same situation. The relevant portion is extracted as under:- 5. The views of the banks that services provided by the foreign bank are-received by the importer or exporter in India is not factually and legally correct because, for a person to be treated as recipient of service, it is necessary that he should know who the service provider is and there should be an agreement to provide service, which may be oral or written. In the present case, the importer and exporter does not even know who the service provider is, as they are not aware of the ide....
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.... of service tax is unsustainable. The impugned orders are set aside and the appeals are allowed with consequential relief, if any.' We find that the issue is no longer res integra and that demand pertaining to 'other financial services' has been erroneously confirmed in the orders impugned before us. 6. On the amounts retained by M/s Amsco Finance Ltd, which is sought to be taxed under 'cash management' within section 65(12) of Finance Act, 1994, the definition comes into play for services rendered by 'banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern' and the question that requires resolution is the nature of activity intended by 'cash management' which has been invoked in the show cause notice for the period prior to 1st July 2012. Admittedly, the omission by specific exclusion of such activity, effected on 1st June 2007, is the sole description that could be fastened on the appellants for taxability as deemed provider of service. From the clarification in circular no. 96/7/2007-ST dated 23rd August 2007 of Central Board of Excise & Customs, issued soon after the legislative change, it would ....
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....ortal created with the help of foreign banks etc. Hence, it is held that it is not the mere transfer of money to attract the exemption but the comprehensive Banking and Financial Service is involved in the issue in hand. Hence, it is held that M/s. AKR Textile are liable to pay service tax Under Section 68 (2) of the Finance Act, 1994 with effect from 1.7.2012.' implies that the adjudicating has not ascertained the nature of the activity in terms of 'consideration' received to determine extent of service and the person 'for' whom such activity is provided by M/s Amsco Finance Ltd which are the essential characteristics for conformity to 'service' in section 65B(44) of Finance Act, 1994. The significance of the architecture of the 'negative list' regime is elaborated thus '12. With this ontogeny, and, coincidentally, corresponding to the age of attainment of majority, the stage was set to give free rein to taxation of services by phasing out the classificatory regime to make room for the 'negative list' regime. Not unnaturally, the principal, and adjunct, machinery that had evolved till then were embedded in the new scheme of Finance Act, 1994, as section 66B, 66C, 66D and 66E, ....
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....s AKR Textiles applicable equally to the several other appeals, the demands impugned therein also do not sustain. 10. Accordingly, all the orders impugned before are set aside and appeals allowed." 11. Further, we find that the service of remittance by a foreign bank to Indian bank of the exporter is not liable to service tax at the hands of the exporter. In this regard, we may also refer to the decision of Chennai Bench of the Tribunal in the case of M/s SKM EGG Products Export (supra) wherein the Tribunal after relying upon the decision of M/s Dileep Industries Pvt Ltd vs. CCE, Jaipur - 2017 (10) TMI 1231 CESTAT NEW DELHI, has observed in para 5.2 as under: "5.2 We find that the appellants have submitted the documents for realization of export sale proceeds to their bank namely SBI, which in turn has used the services of the foreign bank for collection of export sale proceeds. Obviously, the foreign banks who have rendered their services, have deducted their charges while remitting the export sale proceeds to SBI. The appellant has never dealt with the foreign bank on his own and the Banking and Other Financial Service if at all was rendered only to SBI. Amount charged by t....