2011 (8) TMI 911 - AT - Service Tax

Waiver of pre-deposit - lower authorities have held that the service tax liability, though is required to be raised against the foreign service provider but the liability would get shifted to the appellant - High Court judgment in the case of Indian National Shipowners Association v. Union of India reported in (2008 -TMI - 32013 - HIGH COURT OF BOMBAY) laying down that the service recipient in India, from a foreign person, who does not own office in India, is not liable to pay service tax before 18-4-2006 when the provisions of Section 66A were enacted - Decided in favor of the assessee

Summary

Issues:
1. Dispensing with the condition of pre-deposit of service tax and penalty.
2. Liability of service tax on the appellant as a service recipient from a foreign provider.
3. Comparison with relevant judgments of High Courts and Supreme Court.
4. Direction to deposit amount based on interim order.
5. Interpretation of earlier decisions in favor of the assessee.
6. Granting unconditional stay and listing the appeal for final disposal.

Issue 1: Dispensing with the condition of pre-deposit of service tax and penalty.
The appellant sought to dispense with the pre-deposit of service tax and penalty amounting to Rs. 38,57,054/- each imposed under Section 78 of the Finance Act. The lower authorities held the appellant liable for service tax despite availing services from a foreign provider, shifting the liability to the appellant due to their agreement to discharge statutory duties.

Issue 2: Liability of service tax on the appellant as a service recipient from a foreign provider.
The Tribunal analyzed the issue in light of the High Court judgment in Indian National Shipowners Association case, which stated that service recipients in India from foreign entities without an office in India were not liable to pay service tax before April 18, 2006, when Section 66A was enacted. The Tribunal also referred to decisions by the Supreme Court and High Courts supporting this position.

Issue 3: Comparison with relevant judgments of High Courts and Supreme Court.
The Tribunal compared the present case with judgments from the High Courts of Punjab & Haryana and Bombay, along with a Supreme Court decision, all supporting the appellant's position regarding the liability of service tax on service recipients from foreign providers before April 2006.

Issue 4: Direction to deposit amount based on interim order.
The Revenue cited an interim order from the Mumbai Bench directing another appellant to deposit Rs. 5 lakhs for the appeal's hearing. However, the Tribunal found that the decisions from High Courts and the Larger Bench favored the appellant's stance on pre-April 2006 tax liability.

Issue 5: Interpretation of earlier decisions in favor of the assessee.
Considering the precedents and decisions in favor of the appellant, the Tribunal concluded that the appellant had made a prima facie case in their favor, entitling them to an unconditional stay on the pre-deposit condition.

Issue 6: Granting unconditional stay and listing the appeal for final disposal.
The Tribunal granted an unconditional stay on the pre-deposit condition, noting that the appeal would be listed for final disposal on a specified date without the need for further arguments from both sides.

This detailed analysis of the judgment highlights the issues involved, the legal interpretations made by the Tribunal, and the final decision granting the appellant an unconditional stay on the pre-deposit condition.