Dishman Pharmaceuticals & Chemicals Ltd. Vs C.S.T.-Service Tax (CESTAT Ahmedabad)
CESTAT Ahmedabad held that reverse charge not applicable on bank charges in respect of the foreign currency transaction between their local foreign banks engaged in facilitating the transfer of foreign exchange.
Facts- This appeal has been filed by M/s Dishman Pharmaceuticals against the demand of service tax under the category of Banking and other Financial Services on charges paid by them in respect of their foreign currency transaction on reverse charge basis.
Conclusion- CESTAT Ahmedabad in the case of Raj Petro Specialties Pvt Ltd Vs. CCE any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant.
In the instant case there are no allegation that any payment has been made directly by the appellant to the foreign bank. In this circumstances we find that no service tax can be demanded from the appellant.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by M/s Dishman Pharmaceuticals against the demand of service tax under the category of Banking and other
Financial Services on charges paid by them in respect of their foreign currency transaction on reverse charge basis.
2. Learned counsel for the appellant pointed out that the appellant is manufacturer of bulk drugs. In the process of realization of export proceeds from buyers use services of foreign bank as well as Indian Bank. In this process some commission is paid to Foreign Bank by Indian Bank. The Indian Bank charge the reimbursement of the said commission from the appellant. He pointed out that’s revenue is seeking to tax this charges paid by the appellant to the Indian Bank for the Services provided by the Foreign Bank on reverse charge basis. Learned counsel pointed out that this issue has been examined in the following judgments :
