9911796707
TMI Blog2014 (12) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ay service tax for the remittances of foreign currency made from overseas, towards the value of the goods exported by the petitioner and seeks interdiction of the respondent-Bank from making such deductions. The petitioner would also pray for refund of the amounts already deducted. 2. The respondent-Bank as also the respondents 3 to 6, being the officials of the Union of India, have filed counter affidavit in the matter. The exact computation of the amounts have been shown by the respondent-Bank in Exhibit R1D, produced along with the affidavit dated 4-4-2014. It is evident from Exhibit R1D that the respondent-Bank levies charges as "commission" and "exchange" on the conversion and deducts service tax on such charges as also deducts tax as per the Bank Circular; as prescribed in the Rules. By a reply affidavit, the petitioner accepts levy on the conversion charges; but, however, assails the alleged unauthorised levy of service tax on the entire amount credited in the account. 3. The issue being essentially one of statutory interpretation, as also the scope of the delegated powers of the rule making authority, pointed reference has to be made to the various provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itory by one person to another and collected in such manner as may be prescribed". (emphasis supplied) Valuation of taxable services for charging service tax. "Section 67 (1) - Subject to the provisions of this Chapter, where service tax is charged on any taxable service with reference to its value, then such value shall, - (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a financial year and such option shall not be withdrawn during the remaining part of that financial year." (emphasis supplied) Service Tax (Determination of Value) Rules, 2006 : "Rule 2B. Subject to the provisions of Section 67, the value of taxable service provided for the services so far as it pertains to purchase or sale of foreign currency, including money changing, shall be determined by the service provider in the following manner :- For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency at that time, multiplied by the total units of currency. Example I : US $ 1000 are sold by a customer at the rate of Rs. 45 per US $. RBI reference rate for US$ is Rs. 45.50 for that day. The taxable value shall be Rs. 500. Example II : INR 70000 is changed into Great Britain Pound (BGP) and the exchange rate offered is Rs. 70, thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (12) of Section 65 applies only to private "money changers" is to be rejected at the outset. There is no warrant for such assumption from the words employed in sub-clause (iv). It takes in securities and foreign exchange broking and purchase or sale of foreign currency, including money changing, whether such service be rendered by a private company or one exclusively dealing in money changing operations or a Bank; nationalised or otherwise, who is authorised to carry on such activity. The emphasis is on the service provided and the taxing event is also the service rendered. The provision does not distinguish establishments; nor confine the levy to those establishments exclusively conducting money changing operations. The contention raised, hence, has absolutely no legs to stand and is rejected. 6. The further contention is with respect to exemption provided to activities including transaction in money. Going by Explanation 2 of Section 66B(44), such exemption does not apply to conversion of currency from one form to another. Hence, no exemption can be claimed by the petitioner with respect to the service it receives, in so far as the respondent-Bank converts its for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for adoption of a measure; where there is some consideration taken by the service provider other than in terms of money and provides for value determination as prescribed in the rules. 10. Sub-clause (i) of Section 67(1) has to be understood as any provision of service for a consideration in money, being taxed on the value of the gross amount charged by the service provider. By sub-clause (ii), where the provision of service is for a consideration not wholly or partly in money, then the amount in money equivalent to such consideration has to be determined. Such determination would include the amount charged by the service provider in terms of money and that otherwise enuring to the service provider; the latter determined in terms of money; as provided in the rules. Further, by sub-clause (iii), when the provision of service is for a consideration which is not ascertainable, then also the benefit derived by the service provider; has to be determined in terms of money; as per the rules. 11. Hence, sub-clauses (i), (ii) and (iii) are not in derogation of or exclusion to each other; but are mutually complementary, depending upon the manner in which consideration for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er US Dollar, that is the selling rate of US Dollar at that particular point of time. When the Bank purchases such foreign currency at a lower rate, i.e., at Rs. 45 per US Dollar, the ostensible consideration the Bank receives is 50 paise per US Dollar. The petitioner also has a contention that this amount also would be in terms of money and so long as it is not specifically charged by the Bank, that would go beyond the prescription of 'gross amounts' in the statute. However, it is to be specifically noticed that the Bank, at that point of time, does not receive such consideration in terms of money. The Bank could purchase foreign currency as permissible under the various enactments and as regulated by the RBI and sell it immediately or later when the prices may go up or fall. That, however, is a matter to be left to a prudent Banker to decide. 15. When the selling rate is 50 paise higher, per US Dollar, the Bank having purchased it at a lower amount and such consideration having not crystallised in terms of money; is not ascertainable as the "gross amount" charged. It is this unascertainable component which the statute permits, to be ascertained in terms of money, by sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g together of the services in an year is provided for in the enactment. Sub-rule (7B) postulates the levy on such option being exercised, to each of the taxable events in an year; being the service provided. The option, hence, exercised can only be for each of the transactions in an year and not on the total amount of Indian currency converted from foreign currency in an year. The rule itself provides for different rates on "the gross amount of currency exchanged", on a maximum of the converted currency; further emphasising such levy to be on each transaction. The contention raised by the petitioner that such option is to be exercised and made applicable for all the transactions made in a whole year is belied by the proviso itself, which would be redundant, if the contention of the petitioner is accepted. If such clubbing were provided, there was absolutely no requirement for the proviso to sub-rule (7B), which stipulates that on exercising an option, for a financial year, such option shall not be withdrawn during the remaining part of that financial year. 19. This Court does not find any illegality in the levy of 'service tax' made and collected by the respondent-Bank on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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