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2019 (11) TMI 1130 - HC - Service TaxImport of services - Reverse charge mechanism - Service rendered by the intermediary bank (foreign bank) - Bank Guarantee Commission - realisation charges - contentions of the petitioner is that they have not received the service of the foreign bank at Iraq or the intermediary bank situated outside this country directly and therefore, the petitioner is not bound to pay service tax in respect of the service rendered by those banks for the purpose of furnishing bank guarantees. Whether the petitioner or their Banker namely Indian Bank, Adyar, is liable to pay the same in respect of the service rendered by intermediary Bank as well as the Banker at Iraq which furnished the Bank Guarantee to the supplier of the petitioner? HELD THAT:- In this case, there is no dispute to the fact that the petitioner's bank in this country namely Indian Bank, Adyar has not furnished the Bank Guarantee to the foreign supplier of the petitioner. On the other hand, the Indian Bank approached the intermediary Banks which are admittedly located outside this country, which in turn approached the bank situated in Iraq only for the purpose of furnishing Bank guarantee on behalf of the petitioner to its foreign supplier at Iraq - Therefore, there is no doubt that though the event of furnishing the bank guarantee had taken place in three parts, the chain of events connecting those three parts will undoubtedly lead to an irrebuttable conclusion that all those three events were aimed only to provide the service to the petitioner, namely furnishing of Bank guarantee to its foreign supplier. The petitioner had incurred expenditure in foreign currency towards Bank Guarantee Commission and export proceeds realisation charges paid to the intermediary Banks situated outside India. Certainly, a taxable service has been provided to the petitioner namely, Banking or other financial services. It is the categorical finding of the authorities who passed the impugned orders that taxable service by way of issuing bank guarantee to the petitioner's customer at Iraq and by way of remitting the exports proceeds to the petitioner, had been performed by the intermediary banks for the petitioner - the petitioner cannot claim that they are not the recipient of the service. At no stretch of imagination, it can be said that the petitioner's Bank at Chennai, namely, Indian Bank, Adyar, is recipient of the Service provided by the intermediary Bank or the foreign bank situated in Iraq. Needless to say that the Indian Bank, Adyar, namely, the banker of the petitioner has facilitated the service to be rendered by the intermediary Banks and the foreign Bank in Iraq only for the purpose of providing bank guarantee on behalf of the petitioner. Therefore, the petitioner is not justified in shirking its liability to pay service tax relatable to the Bank Guarantee Commission and realisation charges involved in this case. Petition dismissed - decided against petitioner.
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