2026-VIL-1374-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Foreign bank charges and place of provision of service - Appellant had not paid service tax on foreign bank charges and finance cost paid in foreign currency during period 2015 to March 2017 - Department issued notice demanding service tax under Section 66A, 68, 69 and 70 of Finance Act, 1994 - Whether foreign bank charges paid by exporter constitute taxable service in India and leviable under Reverse Charge Mechanism - HELD - The foreign bank of the buyer provided service to its client i.e. the buyer who has a letter of credit facility with the foreign bank after retaining its charges and commission, the net amount is remitted to the appellant's bank in India where the appellant has facility of letter of credit. The appellant has received service if any from its bank in India with whom all documents were negotiated. The appellant does not have any direct connection or nexus with the foreign bank of the buyer. No service provider and service recipient relationship exists between the foreign bank and the appellant. The service provider and service recipient relationship exist between the foreign bank and the buyer. Both the foreign bank and the buyer are located outside India. When the provider of service i.e. the foreign bank and recipient of service i.e. the buyer both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B which is the charging section for levy of service tax - As per Circular No. 180/06/2014-ST, no service tax is leviable as place of provision of service is outside India. The issue has been settled in the appellant's own case for the earlier period and is no more res integra. The foreign bank has not supplied any service to the appellant in India. The appellant is not liable to pay any service tax under RCM - The impugned order is set aside and the appeal is allowed
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