2011 (2) TMI 555 - AT - Service Tax

Demand - Consulting engineering service - Import of Services - Notification No. 26/2004-ST, dated 31-12-2004. - in Union of India v. Indian National Shipowners Association (2010 -TMI - 78723 - Supreme Court of India) wherein it was held that clearly dealt with the impact of introduction of section 66A of the Finance Act and the ratio in the said decision is squarely applicable to the facts of the present case - Appeal is allowed

Summary

Issues:
Challenge to levy of Service Tax against the appellants who are recipients of services from foreign-based firms.

Analysis:
The appeal challenged the imposition of Service Tax on the appellants, arguing that they should not be liable to pay Service Tax before 18-4-2006 when section 66A was introduced in the Finance Act, 1994. The appellant's advocate cited a decision by the Hon'ble High Court of Bombay in a related case, supported by the dismissal of the Special Leave Petition (SLP) by the Supreme Court. On the contrary, the Senior Departmental Representative (SDR) contended that the levy of Service Tax on the recipient was valid from 1-1-2005, referring to a decision by the Larger Bench of the Tribunal in the Hindustan Zinc Ltd. case. The Tribunal noted the dispute in the Hindustan Zinc Ltd. case regarding the liability of the recipient to pay Service Tax before 1-1-2005, which was not interfered with by the Supreme Court. However, the Tribunal found that the decision in the Indian National Shipowners Association case was more relevant to the present case, as it addressed the impact of the introduction of section 66A of the Finance Act. Given the dismissal of the SLP against the Indian National Shipowners Association case, the Tribunal concluded that the order demanding Service Tax for the period before 18-4-2006 could not be upheld.

In conclusion, the Tribunal set aside the impugned order demanding Service Tax for the period before 18-4-2006 and allowed the appeal with consequential relief as per the law.