TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 648
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....the territorial jurisdiction after introduction of GST regime vide Notification No.13/2017- C.E. (N.T) dated 09.06.2017 and as the appellants-assessee falls in their jurisdiction. As the revised name and address of the respondent correctly reflect the revised jurisdictional departmental authorities under whose jurisdiction the appellants-assessee is functioning for the purpose of Service Tax, the miscellaneous application is allowed. Registry is directed to carry out the necessary changes for record purpose. 2.1 The brief facts of the case are that the appellants herein is inter alia, engaged in providing amongst various services, 'Banking and Other Financial Services' which are taxable services under Chapter V of the Finance Act, 1994. For the purpose of payment of Service Tax and for compliance with service tax statute, they are registered with the jurisdictional Commissionerate under service tax centralized registration No. AAACB1534FST378. 2.2 In case of export, the appellants provide services to the exporters for collection of the remittances made by the overseas buyers towards the proceeds of export which involve three different types of transactions. These are (i) 'Do Not ....
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....f Central Excise & Service Tax, Alwar vide Order dated 05.08.2020 in Appeal No. ST/51138 of 2017 reported in 2021 (45) G.S.T.L. 293 (Tri. Del.). The judgement dated 22.11.2019 delivered by Hon'ble Madras High Court in the case of BGR Energy Systems Limited Vs. Addl. Commissioner of GST & C. Ex., Chennai - 2020 (32) G.S.T.L. 186 (Mad) also supports their case. 3.2 He further submitted that during the course of collection of foreign remittances for the exporters in India, the foreign banks deduct charges from the remittance amount due to the exporter and remit the net amount to the banks in India, as the appellants Indian banks act as an agent of their customer-exporter. Therefore, he stated that the appellants bank is not the service recipient; and no services have been received by them. He also stated that even in case, where such value of deduction by foreign banks has been alleged by the department to be part of the service, it is well settled law now that such re-imbursement expenditure will not be included in the value of services as held by the Hon'ble Supreme Court in the case of Intercontinental Consultants and Technocrats. Further, he stated that Trade Notice No.20/2013-14....
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....ce Act. Amongst the various services it provides, the Appellant Bank also provides banking services to the importers/exporters by facilitating the settlement of payment between them in connection with the import and export of goods/services. The Foreign Exchange Management Regulations require all foreign trade transactions to be necessarily routed through normal banking channels. For settlement of payment between the importer and exporter, banks of importer and exporter have to play their role in making and collecting the payments. If the banks of the importer and exporter are different, then the settlement transactions are governed by the URC 522 and UCP 600 protocols issued by International Chamber of Commerce. The protocols define the obligations of each party (i.e. exporter, importer and their respective banks) to International trade. In the absence of any specific agreement to the contrary, all contracts are governed by these protocols. xxx xxx xxx xxx 19. As noticed above, the issue that needs to be decided is whether the Foreign Banks have provided any service of transfer/exchange of documents and transfer of money relating to exports made by the exporters in India, wh....
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....export documents to the bank of the importer abroad and collects payment. Thus, the role of the Appellant Bank is to settle the payment relating to export/import of trade. For performance of such activity, the Appellant Bank charges service tax to the exporters and there is no dispute about the said charges in this Appeal. The Appellant Bank cannot be said to be the recipient of service for the activities undertaken by the Foreign Banks situated outside India, the charges for which are deducted at source on the export bill. The Appellant Bank merely acts on behalf of the Indian exporter and facilitates the service. The Appellant Bank, therefore, would not be liable to pay service tax under the reverse charge mechanism. xxx xxx xxx xxx 36. It is, thus, clear that where service tax is chargeable on any taxable service with reference to its value, then such value shall be determined in the manner provided for in (i), (ii) or (iii) of sub-section (1) of Section 67. What needs to be noted is that each of these refer to "where the provision of service is for a consideration", whether it be in the form of money, or not wholly or partly consisting of money, or where it is not ascerta....
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....re, any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. The cost of free supply goods provided by the service recipient to the service provider is neither an amount "charged" by the service provider nor can it be regarded as a consideration for the service provided by the service provider. In fact, it has no nexus whatsoever with the taxable services for which value is sought to be determined." (emphasis supplied) 39. The aforesaid view was reiterated by the Supreme Court in Union of India v. Intercontinental Consultants and Technocrafts [2018 (10) G.S.T.L. 401 (S.C.)] and it was observed : "23. Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in various sub-clauses of Section 65. Further, it also specifically mentions that the service tax will be @ 12% of the "value of taxable services". Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained....
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....e Appellant Bank has not paid any consideration to the Foreign Bank as is clear from the factual position emerging out of the export trade and, therefore, also the Appellant Bank cannot be said to be the recipient of any service by the Foreign Bank. xxx xxx xxx xxx 43. At this stage, it will be useful to reproduce the relevant portion of the Trade Notice dated February 10, 2014 issued by the Chief Commissioner, Central Excise, Mumbai Zone-I, as it is this Trade Notice that has been relied upon in the decisions referred to by the Learned Authorized Representatives. The relevant portion of the Trade Notice is reproduced below : "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 identity of the foreign banks which would be providing services. Expo....
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....favour of overseas customer of the Indian exporter. It was sought to be contended by the Writ Petitioner that in view of the Trade Notice dated February 10, 2014, only the Indian Bank was liable to pay service tax and not the exporter. On the other hand, it was sought to be contended by the Respondent that the Trade Notice relied upon by the Writ Petitioner was issued by the Mumbai Commissionerate in view of a stay order passed by the Tribunal and the Appeal was still pending before the Tribunal. The Madras High Court referred to the decision of the Supreme Court in Commissioner of Central Excise, Bhopal v Minwool Rock Fibres Ltd. [2012 (278) E.L.T. 581 (S.C.)] and held that Departmental Circulars were not binding on the assessee or quasi judicial authority or courts. The High Court then examined whether the exporter or its Indian banker was liable to pay service tax for the service rendered by the Foreign Bank or the Foreign Intermediary Bank and in this connection observed that though the Indian exporter had not made any remittance to the Foreign Intermediary banks directly, but there could be no dispute that the expenses met out for rendering of such service to the Indian Bank w....
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....ndering of such service by the Indian Bank were borne by the petitioner. In other words, at no stretch of imagination, it can be said that the petitioner's Bank at Chennai, namely, Indian Bank, Adyar, is recipient of the service provided by the intermediary bank or the foreign bank situated in Iraq. Needless to say that the Indian Bank, Adyar, namely, the banker of the petitioner has facilitated the service to be rendered by the intermediary banks and the foreign bank in Iraq only for the purpose of providing bank guarantee on behalf of the petitioner. Therefore, the petitioner is not justified in shirking its liability to pay Service Tax relatable to the bank guarantee commission and realisation charges involved in this case. 19. Further, as rightly pointed out by the Appellate Authority in his order made in Appeal Nos. 489-492/2018, dated 17-9-2018, the recipient of service involved in this case namely, furnishing of bank guarantee, is only the petitioner and not the banker. Since the service receiver is the petitioner and the place of provision of such service is also the location of the petitioner, which is within India, the Service Tax liability is rightly fastened on the p....