Service Tax Leviable only on Receiver of Service from Foreign Bank under “Banking and Other Financial Services”: CESTAT [Read Order]

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service tax can be levied only on the service receiver from the foreign bank which falls under the category of ‘Banking and another financial service’. 

Samsung Electronics India Pvt. Ltd, the appellant assessee was engaged in the manufacture of goods falling under Chapter 85 of First Schedule to the Central Excise Tariff Act, 1985, and also providing/ receiving taxable services, such as management consultant, consulting engineer, market research agency, maintenance and repair, business auxiliary service, renting of immovable property, and Information Technology and Software services. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the service tax demand and for the imposition of penalties along with the interest against the assessee.

Atul Gupta and Prakhar Shukla, the counsels for the assessee contended that the services provided by foreign banks fall under the Banking & Other Financial Services and since the service was provided from a foreign land to a client based in India. Also submitted that the assessee was not a service receiver from the foreign banks. 

Manish Raj, the counsel for the department contended that the assessee can be treated as a receiver of services from a foreign service provider and therefore the assessee was liable to pay service tax in terms of section 66A of the Finance Act,1994. 

The Bench observed that the Service Tax was required to be paid by the recipient of services in India, in cases where services are provided by a foreign person under erstwhile Section 66A of the Finance Act before 1-7-2012 and under the provisions of Notification No. 30/2012-S.T. 

The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that the assessee cannot be treated as service recipient and no service tax can be charged from them under Section 66A of the Finance Act. 

To Read the full text of the Order CLICK HERE

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