2008 (6) TMI 110 - AT - Service Tax

Import of services liability to pay tax - there is no dispute about the fact that the alleged taxable services had been provided by the non-resident foreign service provider from off shore and those services have been provided during 2002-03, 2003-04 and 2004-05 i.e. during period prior to 18-4-06, the appellant, on the issue of liability to pay the tax, have a strong prima facie case in their favour and in view of this, there is no need to go into other issues stay granted

Summary

Issues:
1. Whether the payments made by the Appellants for "Advertising Agency services" and "Consulting Engineers services" are taxable?
2. Whether the Appellants, as service receivers in India, are liable to pay service tax on the alleged taxable services?

Analysis:

Issue 1:
The Appellants made payments to various service providers for services classified as "advertising agency service" and "consulting engineer services." The Appellant argued that the services provided did not fall under taxable categories based on agreements and legal provisions. The Revenue contended that the services provided did indeed fall under taxable categories as per the agreements. The Tribunal analyzed the nature of services provided by each service provider and the applicability of taxation rules to determine the tax liability.

Issue 2:
The crucial issue was whether the Appellants, as service receivers in India, were liable to pay service tax on the alleged taxable services. The Tribunal examined the provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, which defined the person liable for paying service tax in cases of services provided by non-residents. The Tribunal considered the timeline of legal amendments and the absence of specific provisions for taxing services provided by non-residents to Indian recipients before a certain date. It was established that prior to the enactment of specific provisions, the service tax liability could not be imposed on the Appellants for services provided by non-resident foreign service providers offshore. The Tribunal cited relevant judgments and legal frameworks to support this conclusion.

In conclusion, the Tribunal found that the Appellants had a strong prima facie case in their favor regarding the tax liability for services provided by non-resident foreign service providers offshore. As the services were rendered before the enactment of specific provisions, the Tribunal granted a full waiver of pre-deposit of service tax and penalties, staying the recovery of the same. The Tribunal's decision was based on the legal framework and precedents related to the taxation of services provided by non-residents to Indian recipients before the implementation of specific provisions.