2018 (9) TMI 1379 - AT - Service Tax

Business Auxiliary Services - appellant have remitted foreign exchange for engaging themselves in exhibition in foreign country - reverse charge mechanism - Held that - There is no evidence on record that services have been partly performed in India. Further, the entire expenditure incurred by the appellant was for hiring of stall in a foreign country and participating in the exhibitions - there is no evidence on record to establish that any part of the services thereof were performed in India. Appeal allowed - decided in favor of appellant.

Summary

Issues: Applicability of service tax on remittances for engaging in foreign exhibitions under reverse charge mechanism.

Analysis:
1. Facts of the Case: The appellants were involved in manufacturing and clearance of Paper based decorative laminates and remitted foreign exchange for participating in foreign exhibitions. The Revenue contended that the remittances were for availing "Business Auxiliary Services" and required the appellants to pay service tax under the reverse charge mechanism. Two show cause notices were issued, demands confirmed, and appeals made to the Commissioner (Appeals) which upheld the demands.

2. Legal Proceedings: The Tribunal consolidated two appeals with the same issue and appellant for different periods. In absence of the appellant, the learned AR supported the Orders-in-Appeal. The Tribunal examined the submissions and records to determine the applicability of service tax on the remittances made for engaging in foreign exhibitions.

3. Key Considerations: The Tribunal analyzed the provisions of Taxation of Services (Provided From Outside India and Received In India), Rules, 2006, specifically focusing on Business Exhibition Services covered under Rule 3(ii). The rule states that if such services are partly performed in India, they are taxable. However, in the present case, there was no evidence on record to show that any part of the services was performed in India. The entire expenditure was for hiring a stall in a foreign country and participating in exhibitions, indicating no performance of services in India.

4. Judgment: The Tribunal found no evidence to establish that any part of the services was performed in India. Consequently, the impugned orders were set aside, and both appeals were allowed in favor of the appellant. The decision was dictated and pronounced in court by the Tribunal.

This judgment highlights the importance of establishing the place of service performance to determine the applicability of service tax under the reverse charge mechanism. In this case, the lack of evidence showing any part of the services being performed in India led to the Tribunal setting aside the demands for service tax on remittances made for engaging in foreign exhibitions.