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Issues:
Service tax liability for services rendered by a foreign consulting engineer; Interpretation of Rule 6 of Service Tax Rules; Liability of service receiver for service tax payment; Applicability of service tax based on presence of foreign service provider's office in India. Analysis: The appeal challenged the Commissioner (Appeals) order confirming service tax liability of the appellant, a state electricity board, for services provided by a foreign consulting engineer. The agreement between parties acknowledged the foreign firm's services as taxable under the Finance Act, 1994. The issue revolved around the interpretation of Rule 6 of the Service Tax Rules concerning payment of service tax by non-resident service providers without an office in India. The Tribunal noted that prior to 16-8-2002, the service tax liability for foreigners without an office in India was to be paid by their agent or an authorized person. In this case, the appellant, as the service receiver, was deemed liable for service tax payment. However, the Tribunal clarified that the appellant could not be considered an agent or authorized person of the foreign company, as it merely discharged tax liabilities based on payment terms in the contract. Following an amendment to Rule 6 on 16-8-2002, the responsibility for service tax payment shifted to the service receiver if the foreign service provider did not have an office in India. The Tribunal analyzed the contract terms, highlighting that the appellant provided various facilities to the foreign service provider as a client, including office space and support staff. Therefore, the appellant was not liable for service tax post-amendment as the foreign service provider had an office in India. Ultimately, the Tribunal concluded that prior to 16-8-2002, the appellant was not obligated to pay service tax as it was not an agent or authorized person of the foreign service provider. Post-amendment, the appellant was also not liable as the foreign service provider had an office in India. The appeal was allowed, setting aside the Commissioner (Appeals) order, and emphasizing the importance of the presence of the foreign service provider's office in India for determining service tax liability.
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