Samsung Electronics India Pvt. Ltd. Vs Commissioner of Central Excise & Service Tax (CESTAT Allahabad)
CESTAT Allahabad held that in case of foreign export proceeds, the Indian Exporters are not the recipient of services from the Foreign Bank/ intermediary bank. Accordingly, demand of service tax as service recipient on bank charges thereon unjustified.
Facts-
Appellant is engaged in manufacture of goods falling under Chapter 85 of First Schedule to the Central Excise Tariff Act, 1985. They are also providing/ receiving taxable services, such as management consultant, consulting engineer, market research agency, maintenance and repair, business auxiliary service, IPR, GTA, BSS, renting of immovable property and Information Technology and Software services.
Appellant export their goods & such foreign customers remit the amount of export proceeds through foreign banks. During the course of audit it was observed that appellant had paid Rs 14,45,627/- as bank charges to the foreign banks during the financial year 2008-09 but did not paid any service tax on these charges. From scrutiny of balance sheets for the period 2006-07 to 2009-10, it was observed that they had during this period paid Rs 74,35,000/- under the head “Expenditure in Foreign Currency” on which service Tax of Rs 8,89,477/- was payable but not paid by the Appellant.
The demand was confirmed by Additional Commissioner. Commissioner (A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion-
Tribunal Delhi in the case of Kalpataru Power transmission Ltd. has held that the Appellant solely deal with the Indian Bank and appellant do not have any kind of interaction with foreign banks. Clearly, in this matter service if any has been received it is by the Indian Bank and not by the appellant. Hence, amount charged by foreign banks to Indian banks prima facie cannot be considered as service received by the appellant. In view of this, the appellant cannot be treated as service recipient and no service tax can be charged from them under Section 66A of the Finance Act.
Held that the issue involved in this case is no longer res-integra. The issue involved in the case is squarely covered by the above referred decisions and other decisions cited by the counsel for the appellant. Thus we do not find any merits in the impugned orders.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
These appeals filed by the appellant are directed against the order in appeals as detailed in the table below, of the Commissioner (Appeal) Custom and Central Excise Noida. By the impugned orders Commissioner (Appeal) has upheld the order of original as detailed in the table.
