2011 (4) TMI 1301 - HC - Service Tax

Liability of tax - service of consulting finance - appellant s case is that they are the recipients of the service and therefore, there is no liability in law on a recipient of a service to pay the service tax - Held that - similar issue decided in the case of Commissioner of Central Excise & Service Tax, Large Taxpayer Unit Versus Micro Labs Ltd. 2011 (1) TMI 461 - KARNATAKA HIGH COURT , where it was held that from 18-4-2006 the service provided by a person who is outside the country and who has no fixed establishment or permanent address in the country, such a taxable service shall be treated as if the recipient of service had himself provided the service in India and accordingly all the provisions of this Chapter shall apply. Therefore, prior to 18-4-2006 the service tax was not payable by the recipient, in the event the service provider was outside the country and he had no permanent address or place of business within the country - As the period for which the service tax was claimed is anterior to the above said amendment, the recipient of the service has no obligation to pay the service tax - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Liability of the assessee to pay service tax for the period in question.
2. Interpretation of the definition of taxable service and liability to pay service tax.
3. Analysis of relevant notifications and amendments to the Finance Act, 1994 regarding service tax liability.

Issue 1:
The appeal by the revenue challenges the Tribunal's order stating the assessee is not liable to pay service tax for the period in question. The assessee, M/s. Arvind Fashions Ltd., provided taxable services falling under consulting finance without registration or payment of service tax. The Assessing Authority initially dropped proceedings as the assessee claimed to be a service recipient, not a provider. However, the Commissioner reviewed and levied service tax, interest, and penalty. The Tribunal, based on multiple judgments, concluded that technical assistance received did not fit the consulting engineer definition, overturning the Commissioner's decision.

Issue 2:
The Court referred to the case of Commissioner of Central Excise & ST v. M/s. Micro Labs Ltd., emphasizing Section 68 of the Finance Act, 1994. It highlighted that prior to April 18, 2006, service tax liability did not extend to the recipient if the service provider was outside India with no fixed establishment in the country. The introduction of Section 66-A post-April 18, 2006, altered this, making the recipient liable for service tax. As the period in question predates this amendment, the recipient had no obligation to pay the service tax, leading to the dismissal of the appeal.

Issue 3:
The analysis delves into various notifications and amendments to the Finance Act, 1994, regarding service tax liability. Notifications No. 36/2004, 9/2006, and 24/2005 were discussed, emphasizing the responsibility to pay service tax in cases involving service providers outside India without a fixed establishment in the country. The subsequent introduction of Section 66-A on April 18, 2006, shifted the liability to the recipient for services provided by non-residents without a fixed establishment in India. The judgment concludes that the recipient's obligation to pay service tax is determined by the relevant provisions in force during the period of service provision, leading to the dismissal of the appeal based on the timeline of the service tax claim.