Confederation of Indian Industry Vs Commissioner of CGST (CESTAT Delhi)
The Setup
Like most major industry bodies operating internationally, the Confederation of Indian Industry (CII) maintained liaison offices in several countries. These were not subsidiaries, not revenue-generating businesses, and not independent entities in any meaningful sense. They were essentially outposts staffed by CII’s own employees, funded through expense reimbursements from the Delhi headquarters, and limited in their function to coordination, communication, and trade promotion.
The tax department saw things differently. Its position was that the money flowing from CII India to these overseas offices represented payment for services rendered services that CII India was “receiving” from abroad and was therefore liable to pay service tax on, under the reverse charge mechanism embedded in Section 66A(2) of the Finance Act, 1994. Four show cause notices were issued across nearly a decade, covering periods from 2007-08 to 2014-15. The aggregate demand came to approximately ₹5.89 crore, with an equal amount in penalties.
At first read, the department’s theory has a certain logic to it. Section 66A was introduced precisely to rope in services received from abroad to prevent the tax base from being eroded simply because the service provider happened to sit outside India. But whether that provision could be applied to a company’s own offices is quite a different question, and it is that question which the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, addressed in its April 2026 ruling.
