The Customs, Excise & Service Tax Appellate Tribunal, Mumbai exempted the service tax for overseas services consumed abroad despite a fixed establishment in India.
Facts
The appellant was engaged in marketing and sale of agrochemicals in overseas market as a merchant trader. Appellant used to purchase goods from one country and sell the same to another country without bringing such goods to India.
The purchase and sales commission, insurance premium etc. were paid in foreign countries. From September 2012 to January 2013, appellant paid service tax along with interest for delayed payment totaling to Rs.7,85,13,768/- for the above stated services received and consumed in foreign country for the period from 01.10.2007 to 31.12.2012. The said service tax along with interest was paid by the appellant on their own cost without any notice being issued from Revenue and without any enquiry being initiated by Revenue.
Subsequently, appellant filed a claim for refund of the entire service tax along with interest paid by them on the ground that the services were rendered outside India and also were received outside India and, therefore, were not liable for service tax in terms of the provisions of Section 64 of Finance Act, 1994.
Submissions
Counsel for the appellant submitted that the appellant has purchased goods in foreign country and sold them in foreign country and the goods were never received in India nor the goods were exported from India.
AR submitted that he supports the findings of the impugned order and stated that the appellant has business establishment in India and, therefore, as provided under Section 66A and Rule 3 of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006, the appellant was liable to pay service tax.
Decision
The two member bench of Dr. Suvendu Kumar Pati, Member (Judicial) And Anil G. Shakkarwar, Member (Technical) noted that even if a person has a fixed establishment in India, but if the services are provided and consumed in foreign country, then they are not chargeable to service tax in terms of Section 64 of Finance Act, 1994.
The Tribunal said that the provisions of Section 66A of Finance Act, 1994 will operate when the person is having a fixed place of business in India and services are provided from outside India and consumed in India.
The bench held that the services were not consumed in India therefore, the service tax was not liable to be paid by the appellant
The tribunal further observed that the appellant itself has paid service tax subsequent to the transactions and, therefore, they were eligible for the refund.
Case title: M/s. Sharda Cropchem Ltd. v/s Commissioner of CGST & CE, Mumbai West
Citation: Service Tax Appeal No. 85536 of 2021
