2009 (10) TMI 666 - AT - Service Tax

Summary

Issues involved:
1. Waiver of pre-deposit of Service Tax, interest, and penalties based on the terms of the agreement.
2. Interpretation of liability for Service Tax pre- and post-amendment in the Finance Act.
3. Application of legal precedent regarding tax liability based on statutory provisions versus private agreements.

Analysis:

1. The appellant sought waiver of pre-deposit of Service Tax, interest, and penalties based on the agreement with a foreign service provider. The demand of Service Tax was confirmed, holding the appellant liable as per the agreement for taxes leviable on the service provided.

2. The appellant argued that post the introduction of Section 66A of the Finance Act and related rule amendments from 18-4-2006, the recipient of service became liable to pay Service Tax. The demands in question were for a period before this amendment, and the appellant contended that the agreement did not shift the liability to them. Citing a Tribunal decision and a Supreme Court ruling, the appellant argued that tax liability, being statutory, cannot be determined based on private agreements.

3. The revenue, however, relied on the agreement's terms and a High Court decision, asserting the appellant's liability. The Tribunal, considering the Tribunal decision and the Supreme Court ruling, held that tax liability, as per statutory provisions, cannot be altered by private agreements. The demands pre-dated the amendment making the service recipient liable for Service Tax. Consequently, the Tribunal found merit in the appellant's contention, waiving the pre-deposit of Service Tax, interest, and penalties for the appeal's hearing, with recovery stayed during the appeal's pendency. Stay petitions were allowed.