2015 (10) TMI 2092 - AT - Service Tax

Import of services - Service Tax demanded under category of Consulting Engineering Service - Revenue challenges the order of the Commissioner (Appeals) stating that services of foreign firm is not covered under the definition of Consulting Engineers Service Held That - Service Tax liability on any taxable service provided by a non-resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.04.2006, i.e. the date of enactment of Section 66A of the Finance Act, 1994 Contentions of the Revenue rejected and decided in favour of the Respondent.

Summary

Issues:
Appeal against impugned order passed by Commissioner (Appeals) regarding service tax on services rendered by a foreign firm to the Respondent.

Analysis:
The Respondents were involved in the manufacture of Plastics Laminated Flexible Packing Material and paid an amount to a foreign firm in 2002 for services, which was demanded under the category of "Consulting Engineering Service." The Adjudicating authority confirmed the demand of service tax, but the Commissioner (Appeals) set aside the order stating that the services were not covered under the definition of Consulting Engineers service. However, the Tribunal found that the impugned order could be upheld on a different ground. It was noted that the Service Tax liability on any taxable service provided by a non-resident to a recipient in India arises from the date of enactment of Section 66A of the Finance Act, 1994, which was 18.04.2006, as clarified by CBEC Circular F.No.276/8/2009-CX 8A. Therefore, the Tribunal did not find any reason to interfere with the Commissioner (Appeals) order, leading to the rejection of the Revenue's appeal and disposal of the cross objection.

This judgment highlights the importance of the date of enactment of relevant laws in determining the liability for service tax on services provided by non-residents to recipients in India. The clarification provided by CBEC regarding the effective date of Service Tax liability in such cases played a crucial role in the Tribunal's decision to uphold the Commissioner (Appeals) order. The case underscores the significance of legal interpretations and clarifications in resolving disputes related to taxation on services rendered by foreign entities, ensuring adherence to statutory provisions and precedents set by higher courts.