2013 (7) TMI 69 - AT - Service Tax

Import of services Section 66A - Demand of Service tax- Consulting Engineers Service - Section 65(31) - various services like design, drawing, technical knowledge, technical assistance etc. from various companies payments were made in abroad - Whether the demand of service tax rendered to services before enactment of Section 66A is valid - Held that As the services were being provided by the foreign companies , services received by the respondent prior to the enactment of Section 66A will not be liable to pay service tax as Held in Indian National Ship owners Association vs. UOI (2008 (12) TMI 41 - HIGH COURT OF BOMBAY)- Decided against the revenue.

Summary

Issues:
1. Classification of services received by the respondent as "Consulting Engineers Service" under Section 65(31) of the Finance Act, 1994.
2. Liability of the recipient to pay service tax for services received from non-resident companies without offices in India.
3. Interpretation of the judgment of the Hon'ble High Court of Bombay regarding the liability to pay service tax for services received before the enactment of Section 66A in the Finance Act, 1994.

Analysis:
1. The appeal was filed by the Revenue against the order passed by the Commissioner Central Excise (Appeals), Vadodara, regarding the classification of services received by the respondent as "Consulting Engineers Service" under Section 65(31) of the Finance Act, 1994. The department contended that the services received by the respondent from non-resident companies without offices in India are liable for service tax under Rule 2(1)(d)(iv) of the Service Tax Rules read with Section 68 of the Finance Act, 1994. A show cause notice was issued to the respondent demanding service tax, interest, and penalties. The original authority confirmed the tax amount and imposed penalties. The Commissioner (Appeals) allowed the respondent's appeal, leading to the Revenue challenging the order.

2. The Revenue argued that the Consulting Engineer Service is chargeable to service tax under the Finance Act, 1994, making the respondents liable for the tax payment. However, the respondents cited a judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association vs. UOI, which held that services received in India are liable for service tax only after 18.04.2006, following the enactment of Section 66A in the Finance Act, 1994. The respondents contended that as per the High Court's decision, service tax is not payable by the recipient for services received before 18.4.2006.

3. Upon deliberation, the Tribunal found that the service tax demand was confirmed for a period preceding 18.04.2006, during which services were provided by foreign companies abroad and received by the respondent. Citing the judgment of the Hon'ble High Court of Bombay, the Tribunal concluded that the recipient in India is not obligated to pay service tax for services received before 18.4.2006, prior to the enactment of Section 66A in the Finance Act, 1994. Consequently, as the service tax demand pertained to a period before 18.4.2006, the Tribunal ruled that no service tax is payable by the respondent, thereby upholding the order in appeal and dismissing the Revenue's appeal.