2008 (8) TMI 63 - AT - Service Tax

Demand confirmed for the period 9.7.2004 to 31.3.2006 on the ground that the applicants received service of foreign commission agent - contention of appellants that they are liable to pay service tax in respect of such services w.e.f. 18.04.2006 i.e. on introduction of Section 66A, is accepted - it is not a fit case to waive pre-deposit of service tax and penalty Commissioner (Appeals) dismissed the appeal for non-compliance of the provisions of Section 35F not justified matter remanded

Summary

Issues:
1. Waiver of pre-deposit of service tax and penalty
2. Liability to pay service tax for services received from foreign commission agent
3. Compliance with provisions of Section 35F of the Central Excise Act

Analysis:
1. The applicants sought waiver of pre-deposit of service tax amounting to Rs. 23,28,000/- and penalty. The demand was confirmed for the period between 9.7.2004 to 31.3.2006 based on the receipt of services from a foreign commission agent. The appellants contended that they are only liable to pay service tax from 18.04.2006, upon the introduction of Section 66A of the Finance Act. However, the Tribunal referred to a previous decision in the case of M/s. Hindustan Zinc Ltd., where it was held that taxable services provided by non-residents from outside India are subject to service tax from 1.1.2005. Consequently, the Tribunal found no grounds to waive the pre-deposit of service tax and penalty, directing the appellants to deposit Rs. 10 lakhs within 8 weeks for the appeal hearing, with the balance amount being waived upon this deposit.

2. Regarding the liability to pay service tax for services received from a foreign commission agent, the Tribunal's decision was based on the precedent set by the case of M/s. Hindustan Zinc Ltd. This decision clarified that services provided by non-residents from outside India are indeed subject to service tax, contrary to the appellants' argument that they were only liable from a later date. Therefore, the Tribunal's ruling was in line with established legal interpretations and precedents.

3. The Commissioner (Appeals) had dismissed the appeal due to non-compliance with the provisions of Section 35F of the Central Excise Act, without addressing the appeal's merits. Consequently, the matter was remanded to the Commissioner (Appeals) to decide the appeal on its merits upon the appellants showing compliance by making the aforementioned deposit of Rs. 10 lakhs. The Commissioner was directed to provide the appellants with an opportunity for a hearing before making a decision on the appeal's substance, ensuring procedural fairness and compliance with legal requirements.