2014 (4) TMI 793 - AT - Service Tax

Demand of service tax - Original authority dropped the proceedings however Commissioner confirmed the demand of service tax along with interest and penalty - Held that - tax was demanded on the appellant towards service received from M/s.Atona who had no office in India. We find that the Hon ble Bombay High Court in the case of Indian National Ship Owners Association Vs Union of India 2008 (12) TMI 41 - BOMBAY HIGH COURT held that service tax could not be demanded from the service recipient prior to 18.4.2006 as the provisions of Rules 2(1) (d) (iv) of Service Tax Rules 1994 ultra vires under the provisions of the Act - Decided in favour of assessee.

Summary

Issues:
1. Demand of service tax on technical assistance.
2. Validity of demand prior to 18.4.2006.
3. Applicability of Service Tax Rules 1994.
4. Decision of the Hon'ble Bombay High Court and Supreme Court.

Analysis:
1. The appellant, engaged in manufacturing organic peroxides, faced a demand of service tax for technical assistance provided by M/s. Elf Atochem North America Inc. The original authority dropped the proceedings, but the Commissioner confirmed the demand. The issue revolved around taxing services received from a foreign entity without an office in India.

2. The Tribunal referred to the case of Indian National Ship Owners Association Vs Union of India, where the Hon'ble Bombay High Court held that service tax could not be demanded from the recipient before 18.4.2006 due to the ultra vires nature of certain provisions of the Service Tax Rules 1994. This decision was upheld by the Hon'ble Supreme Court, and the Board accepted it. The Tribunal applied this precedent to the current case, leading to the setting aside of the impugned order.

3. Based on the above analysis, the Tribunal concluded that the demand of service tax on the appellant for services received from M/s. Elf Atochem North America Inc. was not valid prior to 18.4.2006. Therefore, the impugned order confirming the demand was set aside, and the adjudication order passed by the Additional Commissioner of Central Excise was restored. The appellant's appeal was allowed with consequential relief.

4. The judgment, delivered by Shri P.K. Das, highlighted the significance of the decisions of the Hon'ble Bombay High Court and the Supreme Court in shaping the interpretation of service tax laws and their applicability to transactions involving foreign entities. The Tribunal's decision aligned with the legal precedents established by the higher courts, emphasizing the importance of legal clarity and consistency in tax matters.