Foreign Banks' Payment Processing Fees During Export Remittance Not Taxable Under Service Tax Reverse Charge Mechanism

CESTAT determined no service tax liability existed under Reverse Charge Mechanism for payment processing services from AFL and foreign banks. The tribunal found no direct service provider-recipient relationship between appellant and foreign entities. Charges deducted by foreign banks during remittance process were part of trade arrangements, not constituting taxable services. Following precedents in AKR Textile and SKM Egg Products cases, the tribunal held that remittance services by foreign banks to Indian banks for exporters are not subject to service tax. For post-July 2012 period, services performed by Hong Kong intermediary were outside taxable territory. The appeal was allowed, setting aside the original tax demand. .....

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