Lingeshwara Creation CESTAT Holds Foreign Bank Charges on Export Remittances Not Taxable Under Reverse Charge

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal set aside the service tax demand raised against Lingeswara Creation in relation to foreign bank charges deducted from export remittances. 

The Tribunal held that the exporter could not be treated as the recipient of banking services rendered by foreign banks merely because remittance charges were deducted before export proceeds were credited in India. 

The Bench reiterated that, in the absence of privity of contract and evidence establishing a service provider–service recipient relationship, reverse charge liability under Section 66A of the Finance Act, 1994 could not be sustained.