The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service tax exemption is available on services by organisers for business exhibitions held outside India.
The bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the Business Exhibition for which the appellant received services from the foreign agencies, were held outside the taxable territory. Resultantly, the Place of Provision of Services received by the appellant from the foreign service provider shall be outside the territory of India. The appellant was not liable to pay service tax even under Reverse Charge Mechanism (RCM).
The appellant/assessee, is the manufacturer of Optical Fiber and Optical Fibre Cables however is also holder of service tax registration. During the course of the audit of the appellant’s record, the department observed that the appellant had made payment to foreign based service providers for managing, for acting as process agents, for ‘Foreign Currency Convertible Bonds’ Global Depository Receipt globally/convertible etc.
The department alleged that in terms of Rule 3 of the Taxation of Services Rules 2006 read with Section 66A(1) of the Finance Act 1994, the appellant being the recipient of service in India is liable to pay tax on the amount paid or remitted to the foreign based service provider under the Banking and Financial services on Reverse Charge Mechanism basis.
The department observed that service tax amounting to Rs. 1,93,968/- has been evaded on these services received by the appellant during the period from December 2012 to September 2013.
The appellant was found not discharging the said liability even for the prior period also starting from the year 2006-2007 to 2011-2012. Accordingly, a show cause notice bearing No. 34/2013/117 dated 2.01.2014 was served upon the appellant proposing the recovery of service tax amounting to Rs. 1,93,968/- along with the proportionate interest and the appropriate penalty under Section 76 and 77.
The appellant contended that the activity rendered by the appellant cannot be categorized as Banking and Financial Services. The appellant is receiving Business Exhibition Service from the foreign service providers (located outside the taxable territory). The taxability of such service has to be determined as per Rule 6 of Place of Provision Rules, 2012. According to which the place of provision shall be the place where the event is held. The exhibitions are held abroad i.e. outside the taxable territory. The place of provision will be the outside taxable territory due to which the appellant was under bona fide belief that it is not liable to pay any service tax.
The department contended that the appellant has received services from the foreign based service providers. Since the appellant is in taxable territory, it was liable to pay service tax under Reverse Charge Mechanism. Since the value/cost of Business Exhibition Service is liable to tax and that the appellant has not discharged the said service tax liability, there is no infirmity in the order when the demand of said amount of service tax has been confirmed.
The tribunal allowed the appeal of the assessee.
Case Details
Case Title: Aksh Optifibre Ltd. Versus Commissioner of Central Excise & CGST
Case No.: Service Tax Appeal No. 50810 of 2019
Date: 13.03.2025
Counsel For Appellant: Jwaria Kainaat
Counsel For Respondent: Aejaz Ahmad
