CESTAT Holds No Service Tax on Foreign Bank Charges for Export Remittances; Follows Precedents in Appellant’s Cases [Read Order]
The tribunal noted the appellant had no direct dealings with the foreign banks.
![CESTAT Holds No Service Tax on Foreign Bank Charges for Export Remittances; Follows Precedents in Appellant’s Cases [Read Order]](https://images.taxscan.in/h-upload/2025/06/06/2041515-no-service-tax-foreign-bank-charges-cestat-taxscan.webp "CESTAT Holds No Service Tax on Foreign Bank Charges for Export Remittances; Follows Precedents in Appellant’s Cases [Read Order]")
In its latest ruling, passed on June 2nd, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appellant, M/s. SKM Egg Products Export (India) Ltd., an exporter of egg yolk powder and albumen powder, is not liable to pay service tax on charges deducted by foreign banks during the remittance of export proceeds, and this conclusion was reached...
In its latest ruling, passed on June 2nd, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appellant, M/s. SKM Egg Products Export (India) Ltd., an exporter of egg yolk powder and albumen powder, is not liable to pay service tax on charges deducted by foreign banks during the remittance of export proceeds, and this conclusion was reached by the bench by relying on the precedents in the appellant’s own case.
Coming to the facts of the case, the Revenue Department observed that the appellant had not received the full export proceeds, as foreign banks had deducted certain amounts for their services. The department contended that these deductions constituted a taxable service under ‘Banking and Other Financial Services’ and demanded service tax of Rs. 1,38,016, along with interest and penalties, for the period from 1-4-2013 to 30-09-2013. The demand was initially confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals).
The assessee who was aggrieved by the above order approached CESTAT for relief.
The assessee’s counsel argued that the issue had already been settled in favor of the appellant in two previous CESTAT rulings—Final Order No. 40223/2023 (dated March 31, 2023) and Final Order No. 40113/2025 (dated January 21, 2025). These cases involved similar show-cause notices for different periods, where the Tribunal had ruled that the appellant could not be treated as the service recipient for the foreign bank charges.
The department’s counsel reiterated the findings of the lower authorities.
The tribunal noted the appellant had no direct dealings with the foreign banks.
The bench, by relying on the tribunal’s order in the assessee’s own case, noted that the foreign banks’ services were rendered to the State Bank of India (SBI), which had engaged them for collecting export proceeds, and thus reached the conclusion that the appellant could not be held liable for service tax on these transactions.
CESTAT, comprising P. Dinesha (Judicial Member) and M. Anjani Kumar (Technical Member), set aside the impugned order and allowed the assessee’s appeal.
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