𝗖𝗘𝗦𝗧𝗔𝗧 𝗖𝗵𝗲𝗻𝗻𝗮𝗶 𝗥𝘂𝗹𝗶𝗻𝗴 𝗼𝗻 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗧𝗮𝘅 𝗮𝗻𝗱 𝗥𝗲𝘃𝗲𝗿𝘀𝗲 𝗖𝗵𝗮𝗿𝗴𝗲 📢 𝗧𝗵𝗲 𝗧𝗿𝗶𝗯𝘂𝗻𝗮𝗹 𝗿𝘂𝗹𝗲𝗱: "Services provided entirely outside India are not subject to service tax under reverse charge mechanism as per Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006."

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗖𝗼𝗺𝗽𝗮𝗻𝘆: M/s. Sundaram Industries Ltd. 𝗜𝘀𝘀𝘂𝗲: The appellant, M/s. Sundaram Industries Ltd., received clearing and forwarding services from a U.S. firm and initially paid service tax under reverse charge. From July 2008, they stopped payments, claiming exemption as services were fully performed outside India. Authorities demanded unpaid taxes with interest and penalties for 2008–2011.

⚖️ 𝗝𝘂𝗱𝗴𝗺𝗲𝗻𝘁: The Tribunal observed that clearing and forwarding agency services fall under section 65(105) (zj) and are covered by sub-rule (ii) of Rule 3. According to the rule, services provided entirely outside India are excluded from service tax liability. The adjudicating authority’s interpretation was incorrect, as Rule 3 applies fully when services are performed outside India, eliminating tax liability. Therefore, the impugned order was set aside, and the appeal was allowed.

📜 𝗖𝗮𝘀𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗧𝗶𝘁𝗹𝗲: M/s. Sundaram Industries Ltd. vs. Commissioner of GST & Central Excise 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗧𝗮𝘅 𝗔𝗽𝗽𝗲𝗮𝗹 𝗡𝗼. 40140 of 2014 𝗢𝗿𝗱𝗲𝗿 𝗗𝗮𝘁𝗲: 13 June 2023 📜 This ruling clarifies that services performed wholly outside India are not subject to service tax under the reverse charge mechanism.