Per Mr. AJAYAN T.V.

Lingeswara Creation, the Appellant herein has preferred this appeal against the Order in Appeal No. CMB-CEX-000-APP-228-16, dated 04.10.2016.

2. The relevant facts of the case are that the Appellant is a manufacturer and exporter of knitted garments. On verification of the records of the Appellant, it was noticed that in respect of the exports made, the Appellant was receiving the export sales proceeds in its Indian Bank account to which it was transferred by the foreign banks situated abroad. These foreign banks deducted their specified charges from the sales proceeds due to the Appellant and transferred the balance amount to the Appellant’s Indian Bank account. It appeared to the department that such amounts deducted was the consideration paid by the Appellant for the services rendered by the foreign bank while transferring the export proceeds. The department therefore issued a Show Cause Notice dated 17.04.2015 (SCN) alleging that the Appellant has failed to pay service tax on the taxable service of “Banking and other financial Services” by the Appellant from a non-taxable territory, as envisaged under reverse charge mechanism in terms of Section 66A read with the provisions of Rule 3 (iii) of erstwhile Taxation of Services (Provided from Outside India and received in India), Rules 2006. The notice invoked the extended period of limitation under proviso to Section 73 (1) alleging that the Appellant had failed to discharge the service tax liability, and had not taken registration and also has failed to file the ST-3 returns. After due process of law, the Adjudicating Authority confirmed the demand along with appropriate interest, imposed an equivalent penalty under Section 78 and penalties under Section 77 (1) (a) and Section 77 (2) of the Act. Aggrieved, the Appellant preferred an appeal before the Commissioner (Appeals -I), Coimbatore. However, the Appellate Authority vide the impugned order rejected the appeal and upheld the order passed by the Adjudicating Authority. Hence this appeal.

3. Shri J V Niranjan, along with Ms. J. Aparna, Ld. Advocates appeared on behalf of the Appellant. Ld. Counsel after arguing at the bar summarised his contentions in writing and inter-alia, submitted that the matter is no longer res integra as this Tribunal in M/s. SKM Egg Products export (India) Ltd v. Commissioner of GST & Central Excise, 2025 (6)TMI 184-CESTAT CHENNAI held that this matter is no longer res integra and that service tax under reverse charge on foreign bank charges deducted from export proceeds is payable only by the actual service recipient, which is the Indian Bank for collection and remittance, following prior rulings.

4. Ms. G. Krupa, Ld. Authorised Representative for the Respondent reiterated the findings of the Appellate Authority and placed reliance on the decisions in State Bank of Bikaner & Jaipur v CCE & ST, Alwar, 2021 (45) GSTL 293 (Tri-Del) and BGR Energy Systems Ltd. v Addl. Commr of GST & C.Ex, 2020 (32) GSTL 186 (Mad). Ld. A.R. took us through the decision of the Jurisdictional High Court wherein the Ld. Single Judge after the discussions pertaining to the furnishing of a bank guarantee by the bank in Iraq to the supplier of the petitioner, went on to render a finding that the petitioner therein was the recipient of the service of furnishing of bank guarantee.

5. The Ld. Counsel in his rejoinder in writing, inter-alia, submitting that during the period from October 2009 to March 2014, while repatriating the export proceeds, the remitting bank of the Appellants foreign customer deducted certain charges as per its terms, before transferring its funds to the Appellants nominated Indian Bank, which is the collecting banker under the export contract and documentation. The Indian Bank upon receiving the remittance net of the foreign bank’s charges, further deducted its own collection charges and credited the balance to the Appellants account. Ld. Counsel submits that while there is no dispute