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TMI Blog2023 (8) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... he recipient of service from the foreign bank is actual liable to pay service tax under reverse charge mechanism, in terms of Rules 2 (d) (1) (iv) of Service Tax Rules, 1984. Even assuming that the appellant have received any service, it is only from the Indian bank therefore, as per the forward charge mechanism, the Indian bank is liable to pay the service tax. Accordingly, under any circumstances in the given transaction the appellant is not liable to pay the service tax. Reliance placed in the decision of this Tribunal in the appellant s own case [ 2022 (12) TMI 1146 - CESTAT AHMEDABAD ] wherein it was held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. With this settled position, we hold that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. The issue is no longer res- integra and in the identical facts and transaction the assessee is not held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. From the undisputed fact of the case we find that the service tax was demanded on the bank charges deducted by the foreign bank while remitting the export proceeds of the appellant to Indian Bank. The Indian Bank has deducted the same amount from the total proceed while remitting it to the appellant. Thus, the Indian bank has merely recovered the amount as reimbursement of the service charges borne by them. Therefore, in this transaction the service provider is the foreign bank and the service recipient is Indian Bank located in India as the recipient of service from the foreign bank is actual liable to pay service tax under reverse charge mechanism, in terms of Rules 2 (d) (1) (iv) of Service Tax Rules, 1984. Even assuming that the appellant have received any service, it is only from the Indian bank therefore, as per the forward charge mechanism, the Indian bank is liable to pay the service tax. Accordingly, under any circumstances in the given transaction the appellant is not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to Section 73 (1) of Finance Act, 1994 and order to recover the same from M/s Raj Petro Specalities Pvt. Ltd, Survey No. 146/2/3, Madhuban Dam Road, Village Karad, Silvassa under Section 73(2) of Finance Act, 1994. (2) I appropriate an amount of the amount of Rs. 6,27,335/- alsonwith interest of Rs.1,54,786/- already paid by M/s Raj Petro Specialties Pvt. Ltd, Survey No. 146/2/3, Madhuban Dam, Road, Village-Karad, Silvassa against the demand at Sr. No. (1) Above and order to pay the remaining amount of service tax liability forthewith. (3) M/s Raj Petro Specialties Pvt. Ltd, Survey No. 146/2/3, Madhuban Dam Road Village Karad, Silvassa shall pay the interest at the appropriate rates on the Service Tax demanded at Sr.No (1) above under Section 75 of Finance Act, 1994. (4) I impose penalty of Rs. 2.22,99,2970/- [Rupees Two Crore Twenty Two Lakhs Ninety Nine Thousand Two Hundred Seventy only] on M/s Raj Petro Specialityes Pvt. Ltd, Survey No. 146/2/3 Madhuban Dam Road, Village Karad, Silvassa, under Section 78 of Finance Act, 1994. However, if the above amounts of service tax are along with interest within 30 days of receipt of this order, the said penalty impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/2013-14-ST-I (Commissioner of ST-I, Mumbai T.N.) dated 10.02.2014, relied upon the following judgment of this Tribunal: * Greenply Industries Ltd. Vs. CCE, Jaipur-I 2015 (38) STR 605 (Tri.-Del.) * Raymond Ltd. Vs. CST, Mumbai-II 2018-TIOL-1250-CESTAT-MUM. * M/s Dileep Industries Pvt. Ltd Vs. CCE, Jaipur 2017-TIOL-3755-CESTAT-DEL. 3. Sh. J. Nagori Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that the service charges paid by the appellant, even though to the Indian Banks, but it is towards the service provided by the Foreign Banks, therefore, the appellant is not liable to pay service tax under Reverse Charge Mechanism. 4. We have carefully considered the submission made by both the sides and perused the records. We find that on the very same issue the Board has clarified in the Circular dated 10.02.2014 as referred by the Ld. Counsel in the said Circular, the relevant para of the Circular is reproduced below : 4. In order to understand the obligations of the foreign banks, the banks in India and importer/exporter, the said URC 522/UCP 600 were examined. Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n bank. Importer or exporter in India does not even know the quantum of charges which the foreign bank would be recovering. Therefore, in view of the above mentioned factual position and also in view of the various articles of URC 522/UCP 600, it is clear that services are provided by the foreign bank to the bank in India. Further, Tribunals have also prima facie held that in such cases, services are provided by the foreign bank to the Indian bank and not to the Indian Exporter. [M/s. Gracure Pharmaceuticals Ltd. v. Commissioner of Central Excise, Jaipur-I - 2013 (32) S.T.R. 249 (Tri.-Del.), M/s. Gujarat Ambuja Exports Ltd. v. Commissioner of Service Tax, Ahmedabad - 2013 (30) S.T.R. 667 (Tri.-Ahmd.)]. 6. It is therefore clarified that, in cases where the foreign banks are recovering certain charges for processing of import/export documents regarding remittance of foreign currency, the banks in India would be treated as recipient of service and therefore required to pay Service Tax. From the above Circular it is abundantly clear that when the Indian Banks are collecting charges including the charges of Foreign Banks toward import and export of the goods of their client. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Moreover, we also find that in Appellant s own case for the previous period similar order had been passed by the original adjudicating authority and on appeal being filed against the same, the Commissioner (Appeals), vide order-in-appeal dated 12-11-2008 has set aside that order and as per the appellant s counsel, no appeal has been filed against that order. In view of this, the impugned order is not sustainable. The same is set aside and the appeal is allowed. 5. As per above judgment it was held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. With this settled position, we hold that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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