The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no service tax can be charged if the assessee was not a service received from the foreign banks under section 66A of the Finance Act, 1994.
Dishman Pharmaceuticals & Chemicals Ltd, the appellant assessee appealed against the order of the adjudicating authority by challenging the Foreign Bank charges, charged by Foreign to Indian Bank, and the Indian bank collected as reimbursement from the assessee was liable to be taxed under the category of Banking and other Finance Services.
R. Subramanya, the counsel for the assessee contended that the service tax demand cannot be raised from the assessee being not covered under the category of the service recipient.
It was further submitted that the issue was no longer res-Integra, as in the assessee’s case the issue had been considered and the appeal was allowed.
Tara Prakash, the counsel for the department contended that there was a service provider and service recipient relationship between the Foreign Bank and Indian Bank. Accordingly in India, the actual service recipient was the Indian Bank liable to pay the Service Tax under the reverse charge mechanism in terms of Section 66A of the Finance Act.
The bench observed that the assessee had neither received any service from the foreign bank nor had directly paid any amount to the foreign bank, they cannot be treated as service recipients and no service tax can be charged from them under the reverse charge mechanism.
The two-member bench comprising Ramesh Nair (judicial) and C.L Mahar (Technical) held the issue was no longer res-Integra and quashed the impugned order while allowing the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
