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TMI Blog2024 (6) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... vices issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999. Further, the appellant does not have any legal recourse or any binding contract with M/s. Amsco to enforce any of its rights. Further, the email from M/s. Amsco is only an information and does not bind M/s. Amsco to any contract with the appellant. Extended period of limitation - levy of penalties - HELD THAT:- In the present case, there was no intent to evade tax as the appellant had no contractual relation with AFL; and all the transactions such as payment, transmission of funds are the liability of M/s C A and it is up to them to decide the mode of the transfer and payment; and the appellant had no role in this regard. Further, the deduction in respect of AFL was clearly shown in the shipping bills for export; drawback was also claimed only on the net amount; and further, being an exporter the service tax payable, if any, would anyway be allowable as a rebate to the appellant; and the entire situation would have been revenue neutral. Therefore, there is no question of lack of bonafides on the part of the appellant in the present case. The issues involved in this appeal are identical that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir invoice when presented for payment. 1.3 Investigation also revealed that M/s. Deusche Bank, Singapore and other banks abroad have deducted their charges from the supplier invoice value towards their service charges like Telegraphic Transfer of export proceeds to the Appellant in respect of various exports effected by the Appellant. 1.4 The Department was of the view that AFL and the foreign banks located in a non-taxable territory were providing service under banking and other Financial Services to the Appellant who paid for the services and is located in the taxable territory. As the Appellant were not maintaining any account either with AFL or such foreign banks, it appeared that the service provided by the aforesaid institutions does not qualify as a service provided to an account holder and hence Rule 3 of the Place of Provision of Services Rules, 2012 appeared to be operative in this case, as the place of provision of service would be the place of the Appellant and the service was deemed as provided in the taxable territory and in terms of Rule 2(1)(d)(g) of Service Tax Rules,1994, the Appellant were liable for payment of Service Tax, in terms of clause 65(105)(zm) and Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas customers cannot be construed as consideration payable to AFL for rendering any service to the Appellant. ii. It was contended that there is no contract between AFL and the Appellant as the deduction in the invoice was made as agreed to between the Appellant and the buyer and the Appellant did not approach AFL for early payment. iii. It was pointed out that there is no nexus between the Appellant and AFL as the service engagement was made between the foreign buyer and AFL and the consideration flows from the buyer to AFL and therefore the Appellant cannot be construed as a service receiver and activities considered as import of service under Section 66 A of the ACT ibid. Further it was submitted that the Appellants have no legal recourse against AFL and will have to seek export proceeds from the buyer in case of default. Hence the mail exchange between Appellant and AFL as per instructions of the buyer was not to be construed as a contractual agreement which is only between AFL and the buyer. iv. It was contended that the engagement of the banker was at the instance of the buyer and it is in their agreement terms, AFL agreed to transfer the sale proceeds through the designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Uniworth textiles Limited Vs. Commissioner of Central Excise, Raipur [2013-TIOL-13-SC-Cus] 3. The Ld. Counsel Shri M. Karthikeyan appearing for the Appellant submitted that the issue is no more res integra, as on identical facts, where the Department sought to levy service tax on the exporter for the service provided by M/s. Amsco to M/s. C A in the case of M/s AKR Textile and Others [2020 (10) TMI 479 CESTAT CHENNAI] and M/s. Eastman Exports Global Clothing P Ltd. [2024 (5) TMI 417-CESTAT CHENNAI] this Hon ble Tribunal has held that no service tax was liable to be paid by the exporter. It is submitted that the ratio of the decisions were squarely applicable to the present case, because the facts are identical. 4. The Ld. Authorised Representative Shri Harendra Singh Pal appeared for the Department. He has reiterated the findings in the impugned order and submitted that the Appellants were liable for payment of Service Tax under reverse charge mechanism under Section 66A of the Finance Act, 1994 in respect of services rendered by AFL to the Appellant, up to 01.07.2012,as the service was liable to be taxed under Banking and Financial Service and therefore Prayed for dismissal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the invoice is also allowed for in terms of the master circular on exports of goods and services issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999. Further, we find that the appellant does not have any legal recourse or any binding contract with M/s. Amsco to enforce any of its rights. Further, the email from M/s. Amsco is only an information and does not bind M/s. Amsco to any contract with the appellant. 9. As regards the invocation of extended period of limitation and levy of penalties, we find that in the present case, there was no intent to evade tax as the appellant had no contractual relation with AFL; and all the transactions such as payment, transmission of funds are the liability of M/s C A and it is up to them to decide the mode of the transfer and payment; and the appellant had no role in this regard. Further, the deduction in respect of AFL was clearly shown in the shipping bills for export; drawback was also claimed only on the net amount; and further, being an exporter the service tax payable, if any, would anyway be allowable as a rebate to the appellant; and the entire situation would have been revenue neutral. Therefore, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is not receiving any services from the foreign banks and there is no service agreement/contract between the foreign banks and M/s Amsco. 8.2 Further, we find that the service, if any, is received only by the State Bank of India which has received the funds and has separately levied fee on the appellant for the credit to the bank account for which service tax has been charged by Bank. 8.3 Further, we find that the CBEC Circulars Nos. 163/14-2012-ST dated 10.07.2012 and 180/06/2014-ST dated 14.10.2014 fully support the contention of the appellant. 9. As regards the invocation of extended period of limitation and levy of penalties, we find that in the present case, there was no intent to evade tax as the appellant had no contractual relation with either M/s Amsco or the foreign banks; and all the transactions such as payment, transmission of funds are the liability of M/s C A and it is up to them to decide the mode of the transfer and payment; and the appellant had no role in this regard. Further, the deduction in respect of M/s Amsco was clearly shown in the shipping bills for export; drawback was also claimed only on the net amount; and further, being an exporter the service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 know who the service provider is and there should be an agreement to provide service, which may be oral or written. In the present case, the importer and exporter does not even know who the service provider is, as they are not aware of the identity of the foreign banks which would be providing services. Exporter or importer in India does not have any formal or informal agreement with the foreign 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, Jaipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 as seen from Reserve Bank of India has clarified that the business of a chit fund is to mobilize cash from the subscribers and effectively cause movement of such cash to keep it working and, therefore, the activity of chit funds is in the nature of cash management. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxation of services by phasing out the classificatory regime to make room for the negative list regime. Not unnaturally, the principal, and adjunct, machinery that had evolved till then were embedded in the new scheme of Finance Act, 1994, as section 66B, 66C, 66D and 66E, to resonate with (44) any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - .. assigned to service in section 65B of Finance Act, 1994 not only to cover all activities save those exogenic to, and excepted in, the definition but also those excluded out of, and exempted from, levy in negative list or by notification. Also, here the expression for another , as substitute for to any person , eliminates the erstwhile touchstone of recipient for determination of the rendering of service and thus conflates the definition and service in its essential form; resort to recipient was henceforth restricted to situations, specifically articulated, where such recognition is necessary for harmony wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn has used the services of the foreign bank for collection of export sale proceeds. Obviously, the foreign banks who have rendered their services, have deducted their charges while remitting the export sale proceeds to SBI. The appellant has never dealt with the foreign bank on his own and the Banking and Other Financial Service if at all was rendered only to SBI. Amount charged by the foreign bank while remitting export sale proceeds, whether can be subjected to service tax or not has been decided by the CESTAT Principal Bench, New Delhi in the case of Theme Exports Pvt. Ltd. Vs. CST, Delhi (supra), by relying on the ratio laid down by the Tribunal in the case of M/s. Dileep Industries Pvt. Ltd. Vs. CCE, Jaipur (supra), where the Tribunal held as under:- 4. After hearing both the parties and on perusal of record, it appears that the first issue is pertaining to the collection charges of the Indian bankers who in turn send the same to the appellant for collection to the foreign bankers. The department has demanded Rs. 2,37,087/- from the appellant. From the record, it appears that while exporting their goods, they lodged their bills for collection to the Indian Bankers who in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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