2010 (10) TMI 541 - AT - Service Tax

Waiver of pre-deposit - Technical assistance - Valuation - The agreement entered by applicant with the foreign company, is for technical assistance - The amount of service tax on technical fee to be paid by applicant as per Section 66A - He submits that the lower authorities are trying to include the cost of traveling and conveyance expenses of the Engineers for the purpose of rendering technical assistance and training to the personnel in India - Rule 7 is specifically applicable for reverse mechanism under Section 66A - Prima facie, the provisions of Rule 7 will apply to this case - The appellant has already discharged the service tax on technical fee charged by the foreign company - The application for waiver of pre-deposit of the amounts is allowed.

Summary

Issues: Liability of service tax on traveling and conveyance expenses paid to foreign personnel for training.

In this case, the issue revolves around the liability of service tax on the actual amounts of traveling and conveyance expenses paid by the applicant to their foreign personnel for visiting and training individuals in India. The appellant argues that the service tax on technical fee has already been paid as per Section 66A of the Finance Act, 1994, starting from a specific date. The disagreement arises from whether the cost of traveling and conveyance expenses of the engineers should be included in the taxable value. The Revenue relies on Rule 5 of the Service Tax (Determination of Value) Rules, 2006, while the appellant contends that Rule 7 of the same rules should apply to this situation.

Upon hearing both sides and examining the records, the Tribunal delves into the interpretation of Rule 7(1) of the Service Tax (Determination of Value) Rules, 2006. The rule states that the value of taxable service received under Section 66A should be equal to the actual consideration charged for the services provided. The Tribunal notes that Rule 7(1) specifically applies to the reverse mechanism under Section 66A. After reviewing the case details, it is evident that the service tax demanded pertains to the traveling and conveyance expenses incurred for technical assistance and training personnel. The Tribunal concludes that Rule 7 is applicable in this scenario. Since the appellant has already paid the service tax on the technical fee, the Tribunal allows the application for waiver of pre-deposit of the amounts in question and stays the recovery until the appeal is resolved.