Service Tax
TRT-2025-
Cestat Chennai
Date:-13-06-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 13 June 2023
Parties: M/s. Sundaram Industries Ltd. Vs Commissioner of GST & Central Excise
Facts –
- The Appellant, M/s. Sundaram Industries Ltd., received services under the category of clearing and forwarding agency service from M/s. Project Management Inc. USA and paid service tax under reverse charge mechanism
- From July 2008 onwards, the appellant stopped paying service tax and contended that as per Rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules 2006, they have no liability to pay service tax on the transaction as the services are completely performed outside India.
- A show cause notice was issued demanding service tax for the period from July 2008 to September 2011 along with interest and penalty. The same was confirmed by the original authority.
Issue –
- Whether the appellant is liable to pay service tax by reverse charge mechanism under the category of ‘Clearing and Forwarding Agency service’?
Order –
- The Tribunal observed that it is seen that clearing and forwarding agency service that falls under sec. 65(105)(zj) is covered under sub-rule (ii) of the Rule 3. It is clear that these categories of services specified under sub-rule (ii) shall be totally excluded when the services are wholly provided / performed outside India.
- The adjudicating authority has held that the said Rule would not be applicable to the appellant on the ground that the same would be applicable only when part of the services are performed in India. On reading of the Rule, it is clear that if the services which are mentioned therein are performed outside India, there is no liability to pay service tax.
- Hence the impugned order is set aside. The appeal is allowed.
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