2018 (5) TMI 825 - AT - Service Tax

Banking and other Financial Services - reverse charge mechanism - For providing services, either the intermediary Bank or foreign Bank deduct certain amount and remit the balance amount to the appellant s Bank account - Held that - the issue arising out of present dispute is no more res-integra, in view of the decision of this Tribunal in the case of M/s. Dileep Industries Pvt. Ltd. vs. CCE, Jaipur 2017 (10) TMI 1231 - CESTAT NEW DELHI , where it was held that while exporting their goods, they lodged their bills for collection to the Indian Bankers who in turn send the same to the foreign banks. The foreign banks while remitting the money to the Indian Bank, deduct their charges for collection of bills which in turn are charged by the Indian Banks from the appellants. When it is so, then the appellant are not entitled to pay the service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of taxable category of service under Banking and other Financial Services for export transactions.

Analysis:
The appeal involved a dispute regarding the taxability of services provided in the context of export transactions. The appellant, engaged in the export of garments, received sale proceeds through approved banking channels. The foreign buyer instructed their banker to remit the invoiced amount to the appellant's account, with transactions facilitated by intermediary banks. The Department contended that these services fell under the taxable category of Banking and other Financial Services, making the appellant liable to pay Service Tax under reverse charge mechanism.

Upon hearing both sides, the Tribunal referred to a previous decision in the case of M/s. Dileep Industries Pvt. Ltd. vs. CCE, Jaipur, where a similar issue was addressed. The Tribunal noted that the charges levied by Indian bankers for collection from foreign banks were not grounds for the appellant to pay service tax. Citing the case of Greenply Industries Ltd. vs. CCE, Jaipur, the Tribunal emphasized that the appellant could not be considered a service recipient if the foreign bank did not directly charge any amount.

Based on the precedent set by previous decisions, the Tribunal found no merit in the impugned order. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant. This decision was made after considering the specific circumstances of the case and the interpretation of relevant provisions under the Finance Act, 1994.