TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1039
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....different periods involving demand of service tax, interest and penalty thereon such as Show Cause Notice (SCN) No. 1461/Commr./2014-15 dated 13.10.2014 adjudicated vide the impugned order dated 30.11.2016 covering adjudged demands for the period 01.07.2012 to 31.03.2014; SCN No. 74/Commr./ST-4/Dn-I/ 2015 dated 04.01.2016 adjudicated by impugned order dated 31.03.2017 covering adjudged demands for the period 01.04.2014 to 31.03.2015; and SCN No. ME/COMMR./ICICI/18/2017-18 dated 30.01.2018 adjudicated by the impugned order dated 06.02.2019 covering adjudged demands for the period 01.04.2015 to 30.06.2017. Thus, we are of the view that these appeals can be considered together for hearing in the interest of justice. Therefore, with the consent of both the parties, all the three appeals are being taken up for consideration and for final disposal herein. 3.1 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 regist....
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....es for Indian importers in issuing, amending LCs for imports, making payment in foreign currency to the supplier abroad on receipt of documents covering the imports. During verification of records, the Department had noted that where the foreign banks are recovering certain charges for processing import/export documents regarding remittances of foreign currency i.e., US$ 20 in the illustrative case above, the banks in India, such as the appellants, are the recipient of service and therefore they are required to pay service tax. 3.4 In this regard, the Department had called for various details/ documents for the purpose of ascertaining the taxability of the above transaction. On the basis of the verification, the Department had interpreted that in cases where the foreign banks are recovering certain charges for processing of import/export documents regarding remittances of foreign currency, the banks in India or the recipient of service. Therefore, the Department had proceeded against the banks in India, being a recipient of service, for demand of service tax under the provisions of Notification No. 30/2012-Service Tax dated 20.06.2012. Accordingly the Department had issued three....
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....e date of entry of payment made in the books of account. Thus, he stated that the appellants bank, who neither make the payment of foreign bank charges nor record the same in the books of account, cannot be made as recipient of services of foreign bank in order to demand service tax on such activity. 4.3 Learned Advocate also stated that the demand for the period July, 2012 to September, 2012 is beyond the normal period of limitation of 18 months, as the Department had erroneously made an assumption that the exact date of filing of the return is not available on record. He further stated that the 'Uniform Customs and Practice for Documentary Credits' UCP-600 and 'Uniform Rules for Collection of Commercial Paper, International Chamber of Commerce Brochure No.522' establishes a framework for interaction between banks and it does not anywhere designated the appellants as recipient of services from the foreign banks. Further, the importers in India for acquiring requisite amount of foreign-exchange is required to file an application in Form A-1 with the authorised dealer for making payments in terms of RBI Master CircularNo.7/2011-12 dated 01.07.2011. Thus, the transactions are in c....
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....o 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, who receive money through the Appellant Bank against the said exports. According to the Department, the Foreign Bank provides "banking and other financial services", as defined under Section 65(12) of the Finance Act, which is taxable under Section 65(105)(zm) of the Finance Act at the hands of the Appellants under a reverse charge mechanism. The contention of the Appellant Bank is that no service has been provided by the Foreign Bank or the Foreign Intermediary Bank....
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....utside 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 ascertainable. In either of the cases, there has to be a "consideration" for the provision of such service. Explanation to sub-section (1) of Section 67 defines "consideration" to include any amount that is payable for the taxable services provided or to be provided, or any reimbursable expenditure, or any amount retained by the lottery distributor or selling agent. It is clear from the aforesaid definition of "consideration" that only an amo....
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....er. 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 for the purpose of calculating the service tax payable thereupon. 24. In this hue, the expression "such" occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing "such" taxable services. As a fortiori, any other amount which is calculated....
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....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. 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 ....
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.... 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 were borne by the Indian exporter. Thus, it cannot be said that the bank of the exporter in India was the recipient of service provided by the Intermediary Bank or the Foreign Bank situated in Iraq. In fact, the Indian Bank of the exporter had only facilitated the service to be rendered by the Foreign Bank for ....
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....dless 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 petitioner, with which, I find no reason to interfere. Since the only point raised in this writ petition is based on the trade circular issued by the Mumbai Commissionerate and that the said issue is answered against the petitioner as discussed supra, I find that both the writ petitions are devoid ....
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.... the issue of payment of service tax, whether to be paid by the exporter or the exporter's bank in India was decided by the Hon'ble High Court of Madras in holding that the exporter alone is liable to pay the service tax and there is no involvement of service and consequential payment of service tax by the exporter's bank. The relevant paragraphs of the said judgement dated 22.11.2019 is extracted and given below: "2....... The petitioner is registered with the Service Tax Department as service provider and service recipient under various categories. The petitioner has entered into certain contracts with Overseas Customers for supply of goods. One such case is where the petitioner has entered into an Agreement to supply/export certain goods to Oil Company situated in Iraq. For the due contract performance, the petitioner has to issue Advance Bank Guarantee as well as Performance Bank Guarantee. Both the guarantees are to be issued from an Iraqi Bank in favour of the customer. The petitioner's banker, namely Indian Bank, Adyar, Chennai, does not have any direct relationship with any of the Iraqi Banks to issue the guarantee and therefore, there was no possibility for ....