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2023 (8) TMI 248 - AT - Service TaxLiability of service tax on appellant or not - reverse charge mechanism - banking and other financial services - overseas banks has deducted certain bank charges from the export realization of the appellant’s export of goods while remitting the export proceeds to the Indian bank of the appellant - HELD THAT:- The service tax was demanded on the bank charges deducted by the foreign bank while remitting the export proceeds of the appellant to Indian Bank. The Indian Bank has deducted the same amount from the total proceed while remitting it to the appellant. Thus, the Indian bank has merely recovered the amount as reimbursement of the service charges borne by them. Therefore, in this transaction the service provider is the foreign bank and the service recipient is Indian Bank located in India as the recipient of service from the foreign bank is actual liable to pay service tax under reverse charge mechanism, in terms of Rules 2 (d) (1) (iv) of Service Tax Rules, 1984. Even assuming that the appellant have received any service, it is only from the Indian bank therefore, as per the forward charge mechanism, the Indian bank is liable to pay the service tax. Accordingly, under any circumstances in the given transaction the appellant is not liable to pay the service tax. Reliance placed in the decision of this Tribunal in the appellant’s own case [2022 (12) TMI 1146 - CESTAT AHMEDABAD] wherein it was held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. With this settled position, we hold that 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. The issue is no longer res- integra and in the identical facts and transaction the assessee is not held to be liable for payment of service tax - the impugned orders are not sustainable - Appeal allowed.
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