2015 (7) TMI 550 - AT - Service Tax

Waiver of pre deposit - Consulting Engineer service - Held that - Amendment to the said Explanation is prospective in nature. It is also evident that the demand has been raised on the outstanding amount in respect of service from associate enterprises received before 10.05.2005. It is nowhere brought out in the impugned order or in the Show Cause Notice that the outstanding amount as on 10.05.2008 has ever been paid by the appellant. - Following the ratio of the judgement of CESTAT in the case of Gecas Services India Pvt. Ltd. (2014 (7) TMI 410 - CESTAT NEW DELHI), we waive the requirement of pre-deposit and stay recovery of the impugned adjudicated liability during pendency of the appeal - Stay granted.

Summary

Issues:
Service tax demand on 'Consulting Engineer' service received from associate enterprises abroad under reverse charge mechanism.

Analysis:
The appeal was filed against the Order-in-Original confirming a service tax demand of Rs. 1,59,95,229 on 'Consulting Engineer' service received from associate enterprises abroad. The appellant argued that they started paying service tax on such services from 10.12.2008 when Section 67 of the Finance Act, 1994 was amended. The contention was that prior to 10.05.2008, no service tax was payable as the amendment was prospective. The Departmental Representative argued that the demand, although raised on the outstanding amount before 10.05.2008, was made after this date and hence falls under the amended Explanation. However, the Tribunal referred to the case of Gecas Services India Pvt Ltd. Vs. CST, New Delhi, where it was held that the amendment to the Explanation is prospective. The Tribunal noted that the demand was raised on the outstanding amount received before 10.05.2008, and since there was no evidence of payment by the appellant, the demand was not sustainable.

The Tribunal cited the case of Gecas Services India Pvt. Ltd. and held that the amendment to the Explanation should not be applied retrospectively. The Tribunal emphasized that the use of words "for the removal of doubts" in the Explanation cannot be treated as having retrospective effect. Referring to a previous judgment, the Tribunal clarified that when debit entries were made before 10-5-2008, they cannot be considered as payments made towards service tax liability until the actual payment was made. Therefore, the demand for interest for alleged delay in discharging the service tax liability was deemed unsustainable. Following the judgment in the case of Gecas Services India Pvt. Ltd., the Tribunal waived the requirement of pre-deposit and stayed the recovery of the adjudicated liability during the appeal process.