RND Softech Private Limited Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Chennai, allowed the appeal filed by RND Softech Pvt. Ltd., a 100% Export Oriented Unit engaged in providing transcription services to doctors in the USA. The dispute concerned service tax allegedly payable under the reverse charge mechanism on services received from Ecostentel, a US-based “dial and Dictate” recording company, during 2009-10 to 2011-12. The adjudicating authority had invoked the extended period of limitation, confirmed the service tax demand with interest and imposed an equivalent penalty under Section 78 of the Finance Act, 1994. The Commissioner (Appeals-I), Coimbatore, upheld that order.
The appellant explained that some doctors in the USA recorded dictation over the telephone into Ecostentel’s server at their own cost. Other doctors requested the appellant to remit the charges to Ecostentel and obtain the recordings so that the appellant could undertake transcription work. The appellant recovered those charges from its US clients as part of its transcription charges. The Department, however, took the view that because the recordings were received in India through the internet and could be accessed after payment to Ecostentel, Ecostentel was rendering a service to the appellant. The Department classified the alleged service as “Business Auxiliary Service” and considered it taxable under Section 66A through the reverse charge mechanism.
