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Issues involved:
The issue involves liability to pay Service Tax under Reverse Charge Mechanism for services rendered by the appellant abroad and the eligibility to avail Cenvat credit on such taxes paid. Summary: Issue 1: Liability to pay Service Tax under Reverse Charge Mechanism The appellant, engaged in Courier Agency Services and Air Travel Agency Services, appointed Courier Agents outside India to deliver items abroad. The Revenue demanded Service Tax for the years 2008-09, 2009-10, and 2010-11 on payments made to these agents. The appellant contended that since the services were rendered abroad, there was no liability to pay Service Tax in India. They argued that they had already paid Service Tax on the entire amount collected from customers in India for delivering items abroad, making the situation revenue neutral. The Commissioner, however, disagreed and confirmed the Service Tax demand along with penalties under Section 76 and Section 77. The appellant challenged this order. The appellant's counsel argued that as per the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, if the services are not partly performed in India, the Service Tax liability under Reverse Charge Mechanism is not attracted. They cited relevant tribunal decisions to support their contentions. They also highlighted that in a revenue-neutral situation, there is no need to pay tax separately. The appellant sought a stay on the recovery of the dues. Issue 2: Eligibility to avail Cenvat credit on taxes paid The Tribunal analyzed the nature of services provided by the appellant, classifying them under Courier Service falling under sub-clause (f) of clause 105 of Section 65 of the Finance Act, 1994. Considering the Taxation of Services Rules, 2006, which state that Service Tax liability arises only when services are partly performed in India, the Tribunal found that the services rendered by the Courier Agency outside India were not partly performed in India. Therefore, prima facie, Service Tax liability would not be attracted. The Tribunal referred to previous cases where relief was granted in similar situations. Additionally, the Tribunal noted that even if the Service Tax liability under Reverse Charge Mechanism is discharged, the appellant would be eligible to avail input service credit under the Cenvat Credit Rules, 2004, making the situation revenue neutral. In light of these considerations, the Tribunal granted an unconditional waiver of pre-deposit of the dues and stayed the recovery during the appeal process.
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