2008 (5) TMI 155 - AT - Service Tax

Appellants were importing IT services - services were rendered abroad and payments were made through foreign exchange conflict of decisions - Prima facie, the Tribunal s ruling rendered in the case of Aditya Cement has been confirmed by the Rajasthan High Court notwithstanding the fact that the matter has been referred to Larger Bench, there is High Court judgment in assessee s favour therefore prima facie the appellants have a strong case on merits - Stay application is allowed

Summary

Issues:
1. Whether service tax is leviable on IT services rendered abroad with payments made through foreign exchange?
2. Whether conflicting decisions regarding service tax liability should be considered in directing the appellant to pre-deposit the amount?

Issue 1:
The appellant was required to pre-deposit a specific amount towards service tax and penalty for importing IT services rendered abroad with payments made through foreign exchange. The appellant argued that service tax should not be levied as the services were performed outside India and payments were received in foreign exchange. The appellant's counsel cited various judgments, including the case of Aditya Cements v. CCE, Jaipur, affirmed by the High Court of Rajasthan, Ispat Industries Ltd. v. CCE, Raigad, and Foster Wheeler Energy Ltd. v. CC & CE, to support the contention that service tax is not applicable in such scenarios.

Issue 2:
The Departmental Representative (DR) contended that the issue had been referred to a Larger Bench in the case of Molex (India) Ltd v. CCE (A), Bangalore, highlighting a conflict of decisions. The DR argued that decisions favoring the Revenue should be considered, and the appellant should be directed to pre-deposit the amount in question. However, upon careful consideration, the Tribunal noted that the ruling in the case of Aditya Cement, confirmed by the Rajasthan High Court, favored the appellant. Despite the reference to the Larger Bench, the High Court's judgment supported the appellant's position, indicating a strong case on merits. Consequently, the Tribunal allowed the stay application, waiving the pre-deposit requirement and staying the recovery process pending further proceedings scheduled for a later date.

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