2008 (11) TMI 77 - AT - Service Tax

Amount paid by the appellant to the foreign company for providing technical know-how - liability of recipient of taxable service provided by non-resident or is from outside India and does not have any office in India - issue has been settled in assessee s favour by the LB of the Tribunal in the case of Hindustan Zinc Ltd. - held that as a recipient of the consulting engineer service from outside India, the appellant was not liable to pay service tax prior to 1.1.2005

Summary

Issues involved: Liability of recipient of taxable service provided by non-resident without office in India

In this case, the issue revolves around the liability of the recipient of a taxable service provided by a non-resident entity without an office in India. The respondents, engaged in the manufacture of Aluminium Chloride, entered into an agreement with a foreign company for technical know-how and made payments during a specific period. The adjudicating authority imposed tax on the amount paid to the foreign company, which was later set aside by the Commissioner (Appeals).

The Tribunal referred to a previous decision in the case of Hindustan Zinc Ltd. vs. C.C.E., Jaipur, where it was established that a recipient of taxable services from a non-resident entity without an office in India is not liable to pay service tax prior to a certain date, as specified in relevant notifications. The Tribunal concurred with this view and held that the appellant, as a recipient of services from outside India without an office in India, was not liable to pay service tax before the specified date.

Consequently, based on the precedent and legal interpretation provided by the Tribunal, the demand for tax and penalty on the appellant was deemed unsustainable. Therefore, the appeals filed by the Revenue were rejected, affirming the decision of the Commissioner (Appeals).