2011 (3) TMI 62 - AT - Service Tax

Recovery of service tax - This appeal arises out of levy of service tax on the recipient of service during the period when there was no recovery provision for recovery from service recipient, in the law - Once there is no recovery following the decision of Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI, reported in 2008 -TMI - 32013 - HIGH COURT OF BOMBAY) the appeal is allowed

Summary

Issues:
Levy of service tax on the recipient of service when there was no recovery provision in the law. Interpretation of liability in light of the decision of Hon'ble Bombay High Court and Hon'ble Supreme Court. Application of past judgments in similar cases to determine liability.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the issue of the levy of service tax on the recipient of service during a period when there was no provision for recovery from the service recipient in the law. The appellant argued that they became liable to pay the tax as soon as the law included provisions for recovery from the service recipient, and they had already discharged a significant amount of the liability. The appellant relied on the decision of the Hon'ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI, which was confirmed by the Hon'ble Supreme Court. The Hon'ble Punjab & Haryana High Court also supported this view. The Tribunal considered these precedents and allowed relief to the appellant for payments made to foreign service providers from abroad when there was no recovery provision in the law.

The Tribunal addressed the argument presented by the Departmental Representative (D.R.) who referred to the decision of the Hon'ble Apex Court in the case of Kerala State Electricity Board vs. CCE, Thiruvananthapuram. However, the Tribunal noted that the present case was different from the Kerala State Electricity Board case as it was based on different grounds, as argued by the appellant following the Indian National Shipowners case. The Tribunal emphasized that past decisions had consistently allowed relief in cases where there was no liability prior to the prescription of recovery by law. Therefore, the Tribunal upheld its decision and allowed the appeal, subject to the recovery of the tax element mentioned in the show cause notice for a specific period.

In conclusion, the judgment provided a thorough analysis of the liability for service tax on the recipient of service in the absence of a recovery provision in the law. It highlighted the importance of legal precedents, specifically the decisions of the Hon'ble Bombay High Court, Hon'ble Supreme Court, and past Tribunal judgments, in determining the appellant's liability. The Tribunal's decision to allow relief to the appellant was grounded in the interpretation of these legal principles and established practices in similar cases.