2026-VIL-871-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Import of goods against foreign currency payments – Appellant made foreign current payment for import of goods and debited them as advertisement and sales promotion charges - Service tax demand on payments made in foreign currency under RCM alleging they relate to import of services – HELD - As per Section 66A or Notification No.30/2012-ST dated 20-06-2012, Service tax is payable on reverse charge basis on import of service and not on payments for import of goods. In the absence of proper evidence from the Revenue establishing the receipt of taxable services, the CA certificates cannot be overlooked being certificates from experts having training and knowledge of accounting systems. In the absence of any evidence, it cannot be presumed that payments have been made towards import of service. The demand of service tax not related to import of service, is set aside - Service Tax on Accrual Entries – Appellant makes provisional accrual entries at year-end for anticipated expenses when corresponding invoices are not received, and reverses these provisions in the subsequent year when actual invoices are received and payment is made. The Revenue demands service tax on these accrual entries – HELD - Under rule 7 of Point of Taxation Rule 2007, the point of taxation on RCM basis is the date of payment or three months from invoice date, whichever is earlier, and since neither payment was made nor invoice received in the year of accrual entry, the demand is not maintainable as these entries are estimates not against actual expenses or invoices - Service Tax on Events and Accommodation Services Outside India – HELD - Under Rule 5 and Rule 6 of Place of Provision of Service Rules, the place of provision of services relating to events and accommodation is where the event is actually held, and since the place of provision is outside India, the services are not imported into India and thus are not liable to service tax in India - Service Tax on Reimbursement of Expenses Incurred Outside India – HELD – The reimbursement of expenses such as food cannot be considered as receipt of BAS. Moreover, as the services are consumed outside India, it cannot constitute import of service. Further, service tax is not leviable on reimbursement of expenses for the period in question - Service Tax without Identification of Nature of Service - A demand for service tax is made on certain foreign currency payments without the revenue identifying the nature of service allegedly received. All payments in foreign currency cannot be presumed to be towards receipt of taxable services, and service tax cannot be demanded based on presumption. Since the revenue has not identified the nature of service, the demand lacks foundation and set aside - Revenue Neutrality as ground for setting aside Demand – HELD - It is settled law that revenue neutrality is a good ground for setting aside demands, particularly when tax liability is discharged under reverse charge mechanism, as the assessee pays the tax and takes the credit resulting in no gain to the government exchequer, and by following catena of judgments of the Tribunal and the Supreme Court, the entire demand being revenue neutral is set aside on this ground alone - Extended Period of Limitation in cases involving Interpretation of Service Tax Provisions - The revenue issues demand beyond the normal period of limitation on the ground that the assessee failed to disclose certain transactions – HELD - Since the entire case relates to interpretation of provisions relating to import of services, reverse charge mechanism, and place of provision of service rules, the extended period of limitation could not have been invoked. The demands beyond normal limitation period are set aside.
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