2008 (8) TMI 65 - AT - Service Tax

Appellant is recipient of consulting engineer service from abroad - liability of the service recipient held that recipient of consulting engineer service from outside India is not liable to pay service tax prior to 01.01.2005 - we are not able to appreciate as to how tax liability which is creature of statute and governed by statutory provisions can be determined or apportioned on the basis of terms of the agreement between two private parties appeal of assessee is allowed

Summary

Issues:
1. Liability of service recipient to pay service tax for consulting engineer service from abroad prior to 01.01.2005.

Analysis:
The appeal involved a dispute regarding the liability of the appellant, a recipient of consulting engineer service from abroad, to pay service tax for the period from March 2004 to July 2004. The appellant contended that as per a decision by a Larger Bench in a previous case, recipients of such services from outside India were not liable to pay service tax prior to 01.01.2005. However, the Revenue argued that the appellant had agreed to bear the tax liability of the service provider, making them liable to pay service tax irrespective of the period in question. The Revenue relied on a judgment by the Kerala High Court, upheld by the Supreme Court, which held that service receivers were liable to pay service tax from a certain date.

Upon examining the judgments of the Kerala High Court and the Supreme Court, the Tribunal noted that the core issue was whether the service recipient was liable to pay service tax based on the terms of the agreement between the parties. The Tribunal expressed its inability to accept the notion that tax liability, a creation of statute, could be determined based on private agreements. The Tribunal highlighted that the Supreme Court's consideration was limited to whether the service recipient was liable to pay interest on the service tax, not specifically addressing the issue of liability to pay service tax before 01.01.2005.

Ultimately, the Tribunal found that the appeal fell within the purview of the Larger Bench's decision, which established that recipients of consulting engineer services from abroad were not liable to pay service tax before 01.01.2005. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal, providing for any necessary consequential relief.

This comprehensive analysis of the judgment highlights the key arguments, legal principles, and the Tribunal's reasoning leading to the final decision on the issue of the service recipient's liability to pay service tax for consulting engineer services from abroad before 01.01.2005.