2011 (6) TMI 352 - AT - Service Tax

Service tax liability on the technical assistance received - Held that - As it is not in dispute that the appellant is the recipient of services and the period involved is prior to 18.4.2006 hence, the recipient of services can be taxed only from 18.4.2006 is a settled law inasmuch as the judgment of Indian National Shipowners Association of India Vs. Union of India 2008 (12) TMI 41 - HIGH COURT OF BOMBAY & CST, Bangalore Vs. Bharat Electronics Ltd. 2010 (8) TMI 148 - BANGALORE HIGH COURT squarely holds the settled law, which is in favour of the assessee

Summary

Issues:
1. Liability of the appellant to discharge Service Tax on technical assistance received from manufacturers of machineries.
2. Interpretation of Rule 2 (d) (1) (iv) of the Service Tax Rules regarding the liability of the recipient of services.
3. Applicability of the judgment in the case of Indian National Shipowners Association Vs. Union of India in determining Service Tax liability.
4. Dispute regarding the period for which the appellant is liable to pay Service Tax under the Finance Act, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore was against an Order-in-Original directing the appellant, a manufacturer of ceramic tiles, to discharge Service Tax liability on technical assistance received from machinery manufacturers. The lower authorities held the appellant liable for Service Tax on 33% of the gross value of the contract due to lack of bifurcation between technical assistance and machinery supply. The appellant contested this, citing legal points. The counsel argued that as per settled law, the recipient of services could only be taxed from a specific date. The Tribunal noted that the key issue was whether the recipient of services during 2003-04 was liable to pay Service Tax under the Finance Act, 1994.

The Tribunal considered legal precedents, including the judgment in the case of Indian National Shipowners Association Vs. Union of India, which established that the recipient of services could be taxed only from a certain date. The Tribunal agreed with the counsel's argument based on this settled law and held that the impugned order was not sustainable. Consequently, the Tribunal set aside the Order-in-Original, providing consequential relief to the appellant in accordance with the law. The appeal was allowed, and the impugned order was deemed unsustainable and set aside.

The Tribunal's decision was based on the interpretation of Rule 2 (d) (1) (iv) of the Service Tax Rules, the legal principle established in previous judgments, and the specific period for which the appellant was held liable to pay Service Tax under the Finance Act, 1994. The judgment highlighted the importance of legal precedents in determining Service Tax liability and ensuring compliance with the established legal framework. The appellant's arguments, supported by relevant legal authorities, were instrumental in the Tribunal's decision to set aside the demand for Service Tax and provide relief to the appellant.