2009 (1) TMI 32 - AT - Service Tax

Appellants paid commission to the foreign based commission agent for procuring the orders who have no office in India - Service Tax was demanded on the payment made to the commission agent - period of dispute is July 2004 to 15.6.05 - issue has already been decided in favour of assessee for the period prior to 1.1.05 - Tribunal in case of Anant Spg. Mills & Bombay HC in case of Indian National Shipowners Association has held that tax is leviable upon insertion of Section 66A w.e.f. 18.4.06

Summary

In the Appellate Tribunal CESTAT NEW DELHI case of M/s. VMT Spg. Co. Ltd., M/s. Arisht Spg. Mills, M/s. VSGM, and M/s. Malwa Cotton Spg. Mills versus CCE, Chandigarh, the common issue involved was whether service tax was applicable on payments made to foreign commission agents. The dispute period was from July 2004 to 15 June 2005. The Tribunal considered the case law of Hindustan Zinc Ltd. vs. CCE, Jaipur and M/s. Anant Spg. Mills vs. CCE, Bhopal. The former held that service tax was not liable prior to 1 January 2005 for services provided by non-residents without an office in India. The latter stated that offshore services were not taxable before 18 April 2006. The Tribunal also referenced Circular No. 36/4/01 stating that services beyond territorial waters were not subject to service tax. The decision in the case of Foster Wheeler Energy Ltd. was cited to support the appeals. The Hon'ble Bombay High Court's ruling in Indian National Shipowners Association vs. UOI was also considered, which stated that service tax could only be levied after the insertion of Section 66A of the Finance Act, 1994 on 18 April 2006. The Tribunal's decision aligned with the Bombay High Court's ruling and set aside the impugned orders, allowing all the appeals with consequential relief. The dictation and pronouncement of the decision occurred in an open court.