2018 (11) TMI 1087 - AT - Service Tax

Business Exhibition Service - the exhibition was conducted abroad - reverse charge mechanism - Held that - When service is fully provided outside, there is no applicability of reverse charge mechanism - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Tax liability on Business Exhibition Service received abroad.
2. Applicability of reverse charge mechanism.
3. Interpretation of Rule 3 of the 2006 Rules.
4. Previous decision by CESTAT Chennai in a similar case.

Analysis:

1. The case involved the appellants, who were manufacturers of textile machinery parts and other products. The issue arose when the department alleged that the appellants had received Business Exhibition Service during a specific period without discharging the service tax liability on a reverse charge basis. A show cause notice was issued proposing a demand for service tax, education cess, and penalty under various provisions of the law. The original authority confirmed the tax demands and imposed penalties, which were partially upheld by the Commissioner (Appeals).

2. During the hearing, the appellant's advocate referred to a previous decision by CESTAT Chennai in Final Order No. 42941/2017, where a similar issue was settled in favor of the appellant. The advocate argued that the matter was no longer open to question as it had been previously decided by the Tribunal.

3. The Tribunal analyzed the facts and the legal provisions involved in the case. Referring to the earlier decision, the Tribunal noted that the Business Exhibition Service received by the appellant was fully performed outside India by a foreign service provider, falling under category (ii) of Rule 3 of the 2006 Rules. The Tribunal emphasized that the service being provided outside India meant that the reverse charge mechanism did not apply. Citing a precedent, the Tribunal held that when a service is fully provided outside India, there is no justification for applying the reverse charge mechanism.

4. Based on the precedent set by the earlier decision of the Tribunal and the clear provisions of the law, the Tribunal set aside the impugned order and allowed the appeal with consequential benefits as per the law. The Tribunal concluded that there was no reason to deviate from the established view and upheld the appellant's position in line with the previous decision.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and precedents relied upon by the Tribunal in reaching its decision regarding the tax liability on Business Exhibition Service received abroad.