The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that no service tax is chargeable on services provided and consumed in foreign countries under section 64 of the Finance Act,1994.
Sharda Cropchem Ltd, the appellant assessee was engaged in the marketing and sale of agrochemicals in overseas markets as a merchant trader and used to purchase goods from one country and sell the same to another country without bringing such goods to India.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the assessee’s services was received in India and hence were taxable under the reverse charge mechanism and service recipient and held that the assessee was liable for payment of the said service tax.
Anurag Mishra and Ashwini Kumar, the counsels for the assessee contended that the assessee had purchased goods in a foreign country and sold them in a foreign country and the goods were never received in India nor the goods were exported from India and not liable to pay service tax.
Further submitted that the services provided outside the taxable territory of India are not taxable as per the provisions of Section 64 read with Section 66A of the Finance Act and the decisions made by the Commissioner (Appeals) were not as per the law and liable to be deleted.
Nitin M. Tagade, the counsel for the department contended that the business of the assessee was established in India and, therefore as provided under Section 66A and Rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 the assessee was liable to pay service tax.
The Bench observed that even if a person has a fixed establishment in India, if the services are provided and consumed in a foreign country then they are not chargeable to service tax in terms of Section 64 of the Finance Act.
The two-member bench comprising Suvendu Kumar Pati (Judicial) and Anil. G Shakkarwar (Technical) quashed the order passed by the Commissioner (Appeals) and held that the assessee was not liable to pay service tax while allowing the appeal filed by the assessee.
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