2019 (9) TMI 1526 - AT - Service Tax

Convertible Foreign exchange or not - FIRC received in Indian Currency INR - HELD THAT - In the instant appeals filed by the appellants it is an undisputed fact that the payment has been received through foreign bank i.e. Mizuho Corporate Bank Ltd for which FIRC has been issued by the banks. The copy of FIRC has been submitted during the course of adjudication proceedings which is evident from the recordings of both the adjudicating and appellate authorities. The instant appeals are squarely covered by the decision of the Tribunal in the case of SUN-AREA REAL ESTATE PVT LTD VERSUS COMMISSIONER OF SERVICE TAX MUMBAI-I 2015 (5) TMI 885 - CESTAT MUMBAI where it was held that FIRCs were issued and there is a specific certification that the payment has not been received in non-convertible rupees which establishes that the payment received and mentioned in the FIRCs are other than non-convertible foreign exchange in other words the payment is in convertible foreign exchange. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether FIRC received in Indian Currency can be considered as convertible Foreign exchange.

Analysis:
The judgment pertains to an appeal directed by the Hon'ble High Court of Calcutta to be reconsidered in light of a previous Tribunal judgment. The issue revolves around whether FIRC received in Indian Currency can be deemed as convertible Foreign exchange. The Ld. Chartered Accountant argued that the facts and issues are akin to a previous case. The Tribunal in the earlier case observed that FIRCs were issued with a specific certification indicating payment in convertible foreign exchange. The judgment cited relevant provisions from the Exchange Control Manual and FEMA regulations to establish that Indian rupees received from a foreign country can be considered as foreign exchange. This was supported by a Supreme Court judgment involving a similar scenario.

The Tribunal analyzed the manner of receipt of foreign exchange as per FEMA regulations, emphasizing that payment in rupees from a foreign bank account constitutes foreign exchange. The judgment highlighted findings from previous orders where it was noted that payments were received in Indian Rupees from foreign banks and converted from foreign currency. The Tribunal concluded that the appellants' appeals align with the precedent set in the Sun Area Real Estate Pvt. Ltd. case, allowing the appeals with consequential benefits to the appellants.

In conclusion, the judgment delves into the interpretation of FIRC received in Indian Currency as convertible Foreign exchange. Through a detailed analysis of relevant regulations and past judgments, the Tribunal established that payments in Indian Rupees from foreign banks can be considered as foreign exchange. The decision in this case was influenced by the previous Tribunal ruling and supporting legal provisions, ultimately leading to the allowance of the appeals filed by the appellants.