2017 (1) TMI 1426 - AT - Service Tax

Business Exhibition Service - appellant have paid consideration towards space booking or for trade fair organized in foreign countries - reverse charge mechanism - Held that - The admitted facts of the case are that the appellant participated in Business Exhibition held outside India. For such participation they paid consideration to the organizers. The Business Exhibition Service is entirely performed outside India. No part of the same is performed in India - In similar set of facts, the Tribunal in the case of Positive Packaging Industries Limited 2013 (4) TMI 727 - CESTAT MUMBAI , after examining the Provisions of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, held that there is no liability for the Indian assessee when the Business Exhibition Service is entirely performed outside India - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax demand upheld by Commissioner (Appeals) Jaipur
2. Liability of service tax on reverse charge basis for participation in foreign business exhibition
3. Interpretation of Taxation of Services Rules, 2006
4. Applicability of Tribunal's decision in Positive Packaging Industries Limited case

Analysis:
1. The appellants contested the order of Commissioner (Appeals) Jaipur upholding a service tax demand of &8377; 1,64,043/- along with penalty under section 78 of the Finance Act, 1994. The dispute arose from the appellant's participation in a business exhibition in a foreign country, leading to the initiation of proceedings to demand and recover service tax under the reverse charge mechanism.

2. The appellant argued that as the business exhibition service was provided by the organizer in a foreign country, there was no liability for service tax on a reverse charge basis. The appellant relied on a previous Tribunal decision in the case of Positive Packaging Industries Limited to support their position.

3. The Tribunal analyzed the facts and found that the Business Exhibition Service was entirely performed outside India, with no part of it taking place in India. Citing the provisions of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, the Tribunal determined that there was no liability for the Indian assessee in such circumstances. The Tribunal's decision in the Positive Packaging Industries Limited case further supported this interpretation.

4. Based on the above findings, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal, ruling in favor of the appellants. The judgment emphasized that when a service is entirely performed outside India, Indian assesses are not liable for service tax, in line with the relevant rules and precedents.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations made, and the final decision reached by the Appellate Tribunal CESTAT, New Delhi.