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TMI Blog2020 (10) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... cern and the question that requires resolution is the nature of activity intended by cash management which has been invoked in the show cause notice for the period prior to 1st July 2012. Admittedly, the omission by specific exclusion of such activity, effected on 1st June 2007, is the sole description that could be fastened on the appellants for taxability as deemed provider of service. From the clarification in circular no. 96/7/2007-ST dated 23rd August 2007 of Central Board of Excise Customs, issued soon after the legislative change, it would appear that the intent was limited to chit funds thus negating the recourse to section 65(105)(zm) as taxable service for which appellants were liable till 30th June 2012. On the other hand, this may have the scope of inclusion within the taxable service as bill discounting for which exemption is afforded by notification no. 29/2004-ST dated 22nd September 2004 when provided to customers. As a customer of the provider of the service is not, under the notification, required to be an account holder, the benefit of such exemption is not deniable to the appellants. Thus, while consideration is passed from appellants to the ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itting Mills); (xix) Service Tax Appeal No: 42111 of 2017 (NSP Knitting Mills); (xx) Service Tax Appeal No: 42113 of 2017 (Royal Classic Mills P Ltd); and (xxi) Service Tax Appeal No: 42258 of 2017 (Fashion Knits) ORDER Appeal against order-in-original no. 34/2014-Commr dated 26th December 2014 of Commissioner of Central Excise, Customs and Service Tax, Coimbatore pertains to fee charged by M/s Amsco Finance Ltd for third part payments for exports effected by M/s AKR Textiles to buyer outside India. The arrangement between M/s C A Buying, Germany, the overseas customer of appellant, and M/s Amsco Finance Ltd, agent of the entity in Germany, was for the latter to make payment to all overseas suppliers of the former on deduction of service fee of 3% from the invoice value of the goods for which consent of appellant was solicited by M/s Amsco Finance Ltd vide email dated 13th February 2008. Likewise, charges, amounting to ₹ 4,93,50,711, deducted by banks from the dues payable by M/s C A Buying for transmitting the netted payments of M/s Amsco Finance Ltd to Indian Bank were also included, with the amount of ₹ 47,45,656 retained by M/s Amsco Finance Ltd, in comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4930711 551986 5490635 2 ST/40558/2015 Poppys Knit wear P Ltd 33/2014 01.04.2008 to 31.03.2013 75753694 4015690 8280463 435990 3 ST/41156/2015 Best Corporation P Ltd 106-2015 01.04.2008 to 31.03.2013 22161771 5790342 2391741 632710 4 ST/42499/2015 NSP Knitting Mills 144-2015 2009 -10 to 2011- 12 - 12860376 - 1324620 5 ST/40057/2016 SCM Garments P Ltd. 175- 15 01.04.2008 to 31.03.2013 4436189 7024606 456927 770928 6 ST/40065/2016 Flower Knitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST/41085/2017 Fashion Knits 019/17 2013-2014 4170778 2627722 515508 324786 17 ST/42048/2017 Best Corporation P Ltd 179/17 2014-2015 4073632 1870688 503501 231217 18 ST/42049/2017 Clifton Exports 174/17 2014-2015 - 4447411 - 549700 19 ST/42110/2017 NSP Knitting Mills 177/ 2017 1.07.2012 to 31.03.2013 - 5846891 - 722676 20 ST/42111/2017 NSP Knitting Mills 178/2017 1.04.2014 to 31.03.2015 - 25762324 - 3184223 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d transfers the foreign exchange to the Indian bank from where the appellant receives the money. The foreign bank in which the overseas buyer deposits the sale proceeds is chosen by the foreign buyer and not by the appellant, who is situated in India. By no stretch of imagination can such foreign bank be considered as a service provider for the appellant who in most cases would not even be aware of the identity of such foreign bank. The act of deduction of an amount as charges for transfer of the foreign exchange to the Indian bank from the sale proceeds of the appellant is only a facility for collecting such charges from the Indian bank. This cannot be considered as payment of charges for services by the appellant to the foreign bank. It is actual charges deducted being bank to bank transaction. The department by the Trade Notice dated 14.2.2014 has clarified the very same situation. The relevant portion is extracted as under:- 5. The views of the banks that services provided by the foreign bank are-received by the importer or exporter in India is not factually and legally correct because, for a person to be treated as recipient of service, it is necessary that he should kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much before the clarification issued by the Trade Notice and also the decision in the case of Greenply. Industries (supra). Therefore, following the judicial discipline in the case of Greenply Industries (supra), and the facts being identical, the levy of service tax is unsustainable. The impugned orders are set aside and the appeals are allowed with consequential relief, if any. we find that the issue is no longer res integra and that demand pertaining to other financial services has been erroneously confirmed in the orders impugned before us. 6. On the amounts retained by M/s Amsco Finance Ltd, which is sought to be taxed under cash management within section 65(12) of Finance Act, 1994, the definition comes into play for services rendered by banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern and the question that requires resolution is the nature of activity intended by cash management which has been invoked in the show cause notice for the period prior to 1st July 2012. Admittedly, the omission by specific exclusion of such activity, effected on 1st June 2007, is the sole descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved the issue to attract the negative list . What M/s. AKR Textile is receiving the comprehensive Banking and Financial Service with effect from 1.7.2012 i.e. as stated earlier processing of export Invoices, making the prompt payment through assistance of customized portal created with the help of foreign banks etc. Hence, it is held that it is not the mere transfer of money to attract the exemption but the comprehensive Banking and Financial Service is involved in the issue in hand. Hence, it is held that M/s. AKR Textile are liable to pay service tax Under Section 68 (2) of the Finance Act, 1994 with effect from 1.7.2012. implies that the adjudicating has not ascertained the nature of the activity in terms of consideration received to determine extent of service and the person for whom such activity is provided by M/s Amsco Finance Ltd which are the essential characteristics for conformity to service in section 65B(44) of Finance Act, 1994. The significance of the architecture of the negative list regime is elaborated thus 12. With this ontogeny, and, coincidentally, corresponding to the age of attainment of majority, the stage was set to give free rein to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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