2022 (11) TMI 1 - AT - Service Tax

Levy of service tax - exhibition service provided by foreign service provider in respect of exhibition in abroad - Service received by the appellant, performed outside India - period 2006-07, 2007-08 and 2009-10 - HELD THAT - In the present case the service provided by the overseas service provider is Business Exhibition Service. The service provider i.e. organiser of exhibitions are located in the countries such as Pakistan, Egypt, Bangkok and Ukraine and no any part of the service was provided in India. Entire service was provided outside India only, therefore, the locations of service is outside India. In such case, service tax cannot be levied in India. Even as per Rule 3 of Sub Rule (II) of Taxation of Service (Provided from Outside India and Received in India) Rules 2006, a service can be taxable in the hand of the recipient of the service in India only when the part of the service is performed in India. In the present case, admittedly the whole of the service was provided outside India and received outside India, therefore, even in terms of the said rule, the service tax is not leviable on the Business Exhibition Service received by the appellant which was performed outside India hence not taxable in the hands of the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is liable to pay service tax for exhibition services provided by a foreign service provider in foreign countries on behalf of the appellant for the period 2006-07, 2007-08, and 2009-10.

Analysis:
The appellant argued that the service was provided solely outside India in countries like Pakistan, Egypt, Bangkok, and Ukraine by service providers from those countries. They emphasized that the service was not provided partially in India and, therefore, should not be subject to tax in India. The appellant also contended that the service did not qualify as an import of service under the Taxation of Service Rules, 2006, citing a precedent from the Tribunal. On the other hand, the Revenue representative supported the findings of the impugned order.

Upon review, the Tribunal found that the service in question was Business Exhibition Service provided by overseas service providers located in countries like Pakistan, Egypt, Bangkok, and Ukraine, with no part of the service rendered in India. Since the entire service was conducted outside India, the Tribunal concluded that the service locations were outside India, making it not subject to service tax in India. The Tribunal referenced Rule 3 of the Taxation of Service Rules, which states that a service is taxable in India only if part of the service is performed in India. Given that the service was entirely performed and received outside India, the Tribunal ruled that the service tax was not applicable to the Business Exhibition Service received by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the tax liability concerning services provided abroad by foreign service providers and the application of the Taxation of Service Rules, emphasizing the importance of the physical location of service provision in determining taxability.