2008 (10) TMI 25 - AT - Service Tax

Demand is confirmed on the ground that the appellants received consulting engineering service from outside India - held that taxable service provided by a non-resident or is from outside India, who does not have any office in India, having been specified as taxable service with effect from 1.1.2005, under Notification No. 36/2004, recipient of such service could not be held liable for paying Service Tax prior to 1.1.2005

Summary

Issues:
Interpretation of Service Tax liability on consulting engineering services received from outside India by a non-resident service provider without an office in India.

Analysis:
The appeals before the Appellate Tribunal CESTAT NEW DELHI involved a common issue regarding the period from 16.8.2002 to 31.3.2003 and from February 2003 to September 2003, where the demand was confirmed due to the appellants receiving consulting engineering services from a non-resident service provider without an office in India. The appellant relied on the Larger Bench decision in the case of Hindustan Zinc Ltd. Vs. CCE, while the Revenue relied on the decision of the Hon'ble Kerala High Court in the case of CCE Vs. Kerala State Electricity Board.

The Larger Bench of the Tribunal in the case of Hindustan Zinc Ltd. held that prior to 1.1.2005, the recipient of taxable services provided by a non-resident service provider from outside India without an office in India could not be held liable for paying Service Tax. This decision was based on Notification No. 36/2004.

Moreover, the Tribunal considered the decision of the Kerala High Court in the case of M/s JCB India Ltd. Vs. CST, where it was clarified that the liability of the service recipient to pay Service Tax cannot be determined based on the terms of the agreement between the parties. The Tribunal emphasized that tax liability is a creation of statute and must be governed by statutory provisions rather than contractual terms.

Based on the above analysis, the Appellate Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief as necessary. The decision was in line with the Larger Bench ruling and emphasized the statutory provisions governing Service Tax liability for services received from non-resident providers without an office in India.