2011 (2) TMI 547 - AT - Service Tax

Demand - Consulting Engineering Service - Section 66A came to statute book with effect from 18-4-2004 for taxing the service enumerated in that Section on the premises that the service provided from abroad shall be treated as if the recipient had himself provided the service in India and accordingly all the provisions of the Chapter would apply - demand before 18-4-2006 can not be made following the Apex Court s judgment in the case of Martin Lottery (2009 -TMI - 33336 - SUPREME COURT OF INDIA) - Appeal is allowed

Summary

Issues:

1. Liability for service tax on Consulting Engineering Service provided from abroad.
2. Interpretation of charging provisions under Section 66A and Section 68(2) of the Finance Act, 1994.

Issue 1: Liability for service tax on Consulting Engineering Service provided from abroad

The appellant contested the liability for service tax on Consulting Engineering Service provided from abroad, arguing that no liability arises before 1-1-2005. However, the appellant further contended that there should be no liability even from 1-1-2005 till 18-4-2006 when Section 66A came into effect. The Revenue's position was based on the amendment to Section 68(2) to recover tax dues from the recipient of the service, asserting that the Assessee is liable to service tax for the Consulting Engineering Service provided from abroad.

Issue 2: Interpretation of charging provisions under Section 66A and Section 68(2) of the Finance Act, 1994

The Tribunal noted the absence of a specific charging provision during the relevant period to equate services provided from outside India with those provided in India. It was highlighted that Section 66A, which came into effect from 18-4-2004, aimed to tax services provided from abroad as if the recipient had provided the service in India, subjecting them to all provisions of the Chapter. The Tribunal emphasized the importance of strict adherence to the letter of the law in matters of taxation, citing the case of Martin Lottery (2009) which influenced their decision to allow the appeal of the appellant due to the lack of alignment between the specific charging provisions and Section 68(2) of the Finance Act, 1994.

This judgment clarifies the liability for service tax on Consulting Engineering Service provided from abroad and provides a detailed analysis of the interpretation of charging provisions under Section 66A and Section 68(2) of the Finance Act, 1994. The decision underscores the significance of specific charging provisions in taxation matters and the necessity for alignment with statutory provisions to determine tax liability accurately.