2010 (12) TMI 943 - AT - Service Tax

Commission paid by the appellant to the foreign service provider during the period 9.7.2004 to 10.1.2006 - whether will be taxable in absence of taxing provision which came later into Statute Book by Finance Act, 2006? - Held that - Levy imposed was governed by section 66A of the Finance Act, 1994 for the impugned period. no cogent evidence led by Revenue to prove their stand on facts to hold that the appellant should incur liability for a period not declared by law to be taxable. Accordingly, the appeal is allowed with consequential relief, if any, as may be permissible in accordance with law

Summary

Issues:
Dispute over tax liability for commission paid to foreign service provider between 9.7.2004 to 10.1.2006 without a specific taxing provision during that period.

Analysis:
The appellant argued that the commission paid to the foreign service provider should not be taxable during the mentioned period as there was no specific provision for taxing it until later introduced by the Finance Act, 2006. The appellant relied on the decision of the Hon'ble High Court of Bombay in a similar case to support this contention. Additionally, the appellant highlighted that the Supreme Court had dismissed the Revenue's Special Leave Petition (SLP) against the Bombay High Court's judgment, indicating a loss for the Revenue.

The appellant further supported their argument by referencing the decision in Laghu Udyog Bharati v. Union of India, emphasizing that without the relevant taxing provision in force during the period in question, the Revenue could not impose service tax. The appellant contended that the absence of section 66A of the Finance Act, 1994 during the period prevented the Revenue from collecting service tax for services provided by a foreign service provider.

On the contrary, the Revenue argued that there was no evidence of commission payment and cited a judgment from the High Court of Rajasthan to challenge the appellant's position. Despite this, the Tribunal noted that the Revenue's arguments lacked substantial evidence to establish the appellant's liability for a period not covered by the law for taxation.

After hearing both sides and examining the records, the Tribunal concluded that the levy was governed by section 66A of the Finance Act, 1994 during the disputed period. The Tribunal upheld the appellant's position, considering the legal precedents cited and the lack of concrete evidence presented by the Revenue. Consequently, the appeal was allowed, granting any consequential relief permissible under the law.