No Service Tax On Services By Organizer In Respect Of Business Exhibition Held Outside India: CESTAT

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. Accordingly, appellant is not liable to pay service tax even under RCM.”

In this case, the assessee/appellant is the manufacturer of Optical Fiber and Optical Fibre Cables. The assessee 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 assessee 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.

Accordingly, a show cause notice was served upon the assessee proposing the recovery of service tax. The said proposal was initially confirmed. The assessee had filed an appeal which was dismissed.

The assessee contended that the exhibitions are held abroad i.e. outside the taxable territory. Accordingly, the place of provision will be the outside taxable territory due to which the assessee was under bona fide belief that it is not liable to pay any service tax. Otherwise also the activities stands exempted in terms of Notification No. 25/2012 dated 20th June 2012. The demand is alleged to have wrongly been confirmed.

The department submitted that the undisputed fact is that the assessee has received services from the foreign based service providers. Since assessee is in taxable territory, it was liable to pay service tax under Reverse Charge Mechanism.

The Tribunal stated that “the Mega Exemption Notification No. 25/2012 dated 20th June 2012, clause (31) thereof, also exempts the services by an organizer to any person in respect of a Business Exhibition held outside India. The adjudicating authorities have miserably ignored the exemption notifications.”

From Section 66B also there is the tax liability for all services being not covered in the negative list. However, section itself clarifies any service shall not be liable to tax if same falls under any of the exemption notification. Hence, the demand of service tax has wrongly been confirmed, observed the bench.

In view of the above, the Tribunal allowed the appeal.

Case Title: Aksh Optifibre Ltd. v. Commissioner of Central Excise & CGST, Alwar

Case Number: Service Tax Appeal No. 50810 of 2019

Counsel for Appellant/ Assessee: Jwaria Kainaat

Counsel for Respondent/ Department: Aejaz Ahmad

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