2011 (9) TMI 820 - AT - Service Tax

Waiver of pre-deposit - appellant had received services from a French company - liability of service recipient in respect of services provided from abroad commenced only with effect from 18.4.2006 with the insertion of Section 66A in the Finance Act 1994 Held that - in the case of Metro Cash and Carry (2011 - TMI - 207068 - KARNATAKA HIGH COURT - Service Tax) franchise service received by the Indian company from abroad was not liable to Service Tax prior to 18.4.2006 irrespective of the fact that certain Notifications issued by the Central Government had made the service recipient liable to pay Service Tax prior to the said date. waiver of pre-deposit allowed

Summary

Issues:
Waiver of pre-deposit and stay of recovery in relation to Service Tax and penalties for the period 1.1.2005 to 21.12.2005.

Analysis:
The appellant sought waiver of pre-deposit and stay of recovery regarding Service Tax and penalties for a specific period. The appellant argued that they were not liable to pay any Service Tax on the amounts paid to a foreign company for services received during the said period. The appellant contended that the liability of the service recipient for services provided from abroad only began from 18.4.2006 with the insertion of Section 66A in the Finance Act, 1994. Reference was made to the judgment of the Hon'ble Karnataka High Court in a similar case, where it was held that services received from abroad were not liable to Service Tax before 18.4.2006, despite certain Notifications issued by the Central Government. The appellant's counsel also cited other decisions in support of this argument.

The JCDR opposed the appellant's application, reiterating the findings of the impugned order. However, after considering the submissions, the Tribunal found that the appellant had a prima facie case against the demands made. The Tribunal noted that the High Court's decision supported the appellant's position, leading to a favorable outcome for the appellant. Consequently, the Tribunal granted the waiver of pre-deposit and stay of recovery concerning the amounts adjudged against the appellant for the period before 18.4.2006.

In conclusion, the Tribunal, comprising P G Chacko and M Veeraiyan, JJ., pronounced the decision in open court, providing relief to the appellant by granting the waiver of pre-deposit and stay of recovery for the disputed period. The judgment highlighted the legal position regarding the liability of service recipients for services received from abroad before the specific date mentioned in the Finance Act, 1994, based on relevant case law and statutory provisions.