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2010 (5) TMI 470 - AT - Service TaxCharge of service tax under section 66A of the Finance Act, 1994 Services received from abroad services received prior to enactment of section 66A, i.e., with effect from 18-4-2006, that taxable services received from abroad by a person belonging to Indian are taxed in his hands demand, set aside
Issues:
Service tax liability of the appellant as a recipient of services. Analysis: The appeal was against the Order-in-original No. 27/2008-ST, dated 28-11-2008, concerning the payment of service tax to foreign companies for various services. The issue revolved around the liability of the appellant to pay service tax as the recipient of services from foreign entities. The Central Government's Notification No. 36/2004-Service Tax, dated 31-12-2004, defined taxable services provided by non-resident entities without an office in India as taxable. The show-cause notice directed the appellant to justify why they should not be liable for service tax under rule 2(1)(d)(iv) of the Service Tax Rules, 1994. The adjudicating authority confirmed the service tax demand on the appellant based on the aforementioned rule. The appellant argued that their service tax liability should only apply from 18-4-2006, citing various decisions. The High Court of Bombay's judgment in a similar case supported the appellant's position, emphasizing that service tax could not be levied on recipients based on rule 2(1)(d)(iv). The Apex Court upheld this judgment, further strengthening the appellant's argument against the demand raised by the lower authorities. The Tribunal agreed with the appellant's contention, stating that the demand for service tax before 18-4-2006 could not be enforced. Citing the High Court's ruling, the Tribunal emphasized that service tax liability cannot be shifted to recipients based on rule 2(1)(d)(iv). The enactment of section 66A in 2006 granted legal authority to levy service tax on recipients of taxable services, which was not applicable before. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.
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