2015 (12) TMI 80 - AT - Service Tax

Demand of service tax - Import of services - Tax on the amount which the foreign bank charged from ING Vyasa Banker which, in turn, was recovered from the appellant - Held that - No documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Moreover, we also find that in Appellant s own case for the previous period similar order had been passed by the original adjudicating authority and on appeal being filed against the same, the Commissioner (Appeals), vide order-in-appeal dated 12-11-2008 has set aside that order and as per the appellant s counsel, no appeal has been filed against that order. In view of this, the impugned order is not sustainable - Decided in favour of assessee.

Summary

Issues:
Service Tax demand on amount charged by foreign bank from ING Vyasa Bank, appellant's liability as a service recipient, applicability of reverse charge mechanism, previous adjudication outcome, sustainability of impugned order.

Analysis:
The case involved an appeal by exporters against a Service Tax demand of &8377; 96,392/- imposed by the department. The demand was based on the amount charged by a foreign bank from ING Vyasa Bank, which was then recovered from the appellant. The appellant argued that they did not receive any service directly from the foreign bank and should not be considered a service recipient liable for Service Tax under the reverse charge mechanism. The appellant contended that it was ING Vyasa Bank that received the services, not them. The Commissioner (Appeals) had upheld the initial order, leading to the current appeal.

Upon hearing both sides, the Tribunal noted that there was no evidence to show that the foreign bank directly charged any amount from the appellant. The records indicated that ING Vyasa Bank had paid the charges to the foreign bank. Therefore, the Tribunal concluded that the appellant could not be classified as a service recipient under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Additionally, the Tribunal highlighted that a similar order in the appellant's favor had been issued for a previous period, which was not appealed by the department. Consequently, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal.

In summary, the Tribunal ruled in favor of the appellant, holding that they were not liable for the Service Tax demand related to the amount charged by the foreign bank from ING Vyasa Bank. The decision was based on the lack of evidence showing direct charges to the appellant, the role of ING Vyasa Bank as the recipient of services, and the precedent set by a previous order in the appellant's favor. The appeal was allowed, and the impugned order was overturned.