The CESTAT consisting of Ramesh Nair (Judicial Member) and C.L.Mahar Member (Technical) held that Service tax is not chargeable on Foreign Bank charges, charged by Foreign to Indian Bank and the Indian bank collected as reimbursement.
BACKGROUND
The revenue proposed demand of Service Tax on the banking charges, which was charged by Foreign Bank to the Indian Bank and the Indian Bank has recovered the same from the appellant as reimbursement.
If at all there is a service provider and Service recipient relationship, it is between the Foreign Bank and Indian Bank. Accordingly in India the actual service recipient is Indian Bank liable to pay the Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994. Therefore in any case the service tax demand cannot be raised from the appellant being not covered under the category of service recipient.
ISSUE RAISED
Whether, the Foreign Bank charges, charged by Foreign to Indian Bank and the Indian bank collected as reimbursement from the appellant is liable to be taxed under the category of Banking and other Finance Services.
RULING
The tribunal held if at all there is a service provider and Service recipient relationship, it is between the Foreign Bank and Indian Bank. Accordingly in India the actual service recipient is Indian Bank liable to pay the Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994. Therefore in any case the service tax demand cannot be raised from the appellant being not covered under the category of service recipient.
Case Title: Dishman Pharmaceuticals & Chemicals Ltd Versus C.S.T.-Service Tax – Ahmedabad
Citation: Service Tax Appeal No. 11036 of 2014- DB
