2015 (4) TMI 39 - HC - Service Tax

Consultancy services - Service provided outside India - Held that - by an amendment which was brought on 18.4.2006 with effect from 1.5.2006, it was provided that in case where the service provider was situate outside India, the service recipient would be liable for payment of tax and would be treated as a service provider. Prior to that, there was no provision for taxing the service provider situated outside India. The matter in hand relates to a period prior to such amendment, It is not disputed that the provision for payment of service tax extends to the whole of India (except the State of Jammu & Kashmir). The same would mean that the tax liability would not be there of a person or company which is situated outside India and having no business establishment in India. In the present case, the service was provided by the respondent company from its office in United Kingdom. - no reason to differ with the order passed by the Tribunal in the present case as the service provider i.e., the respondent company was located outside India and did not have any business operations or office within the territory of India. - Decided against Revenue.

Summary

Issues: Jurisdiction for service tax on consultancy services provided by a foreign company without an office in India.

Analysis:
The case involved a respondent company situated in the United Kingdom providing consultancy services to an Indian company. The Assessing Authority had assessed the respondent for service tax, which was challenged and set aside by the Commissioner of Appeals. The Revenue then appealed to the Customs, Excise & Service Tax Appellate Tribunal, which also dismissed the appeal. The main contention was whether the service provided by a Consulting Engineer from outside India would be subject to payment of service tax.

The appellant argued that a 2006 amendment made the service recipient liable for tax if the service provider was situated outside India. However, the period in question was before this amendment. It was noted that prior to the amendment, there was no provision for taxing service providers outside India. The law extended the provision for payment of service tax to the whole of India, except Jammu & Kashmir, implying that a person or company situated outside India with no business establishment in India would not have tax liability. In this case, the service was provided by the respondent company from its office in the United Kingdom.

The Tribunal, citing a precedent, ruled that since the respondent company did not have any office or operations within India, they were not liable for tax. The argument that the company's officers had visited a plant in India was rejected as the company had no branch or office in India. The court upheld the Tribunal's decision, stating that the respondent company being located outside India and having no business operations or office in India, was not liable for service tax. The appeal was dismissed with no order as to costs.