2008 (8) TMI 157 - AT - Service Tax

Service received from their Foreign Agents prior to 1-1-2005 - taxable service provided by a non resident or from outside India, who does not have any office in India, having been specified as taxable service w.e.f. 1-1-05, u/not. 36/2004, recipient of such service could not be held liable for paying service tax prior to 1-1-2005 notwithstanding the amendment in rule 2(1)(d) of STR u/not. No.12/2002 - held that appellant was not liable to pay service tax prior to 1-1-2005 consulting engineer

Summary

Issues Involved:
Service tax liability on the respondent with reference to service from Foreign Agents prior to 1-1-2005.

Analysis:

Issue 1: Service Tax Liability
The dispute in this case revolves around the service tax liability on the respondent concerning services provided by their Foreign Agents before 1-1-2005. The Commissioner (Appeals) had previously allowed the respondent's appeal, citing the Tribunal's decision in the case of Aditya Cement v. CCE [2007] 9 STT 156 (New Delhi-CESTAT). The Tribunal held that the definition of "person liable to pay service tax" under rule 2(1)(d)(iv) of Service Tax Rules was not sufficient for the revenue to impose service tax, given the Notification issued by the Central Government on 31-12-2004. The Larger Bench of the Tribunal in the case of Hindustan Zinc Ltd. v. CCE [Misc. Order No. M/85/2008-ST, dated 27-6-2008] (CESTAT-LB) endorsed the earlier decision in the case of Aditya Cement, stating that the recipient of a taxable service provided by a non-resident or from outside India could not be held liable for paying service tax before 1-1-2005, despite the amendment in rule 2(1)(d) of the Service Tax Rules under Notification No.12/2002.

Issue 2: Tribunal's Decision
Following the Larger Bench decision in the Hindustan Zinc Ltd. case, the Tribunal found no merit in the revenue's appeals. Therefore, both appeals filed by the revenue were rejected based on the precedent set by the Tribunal's decision in Hindustan Zinc Ltd. The Tribunal concurred with the view expressed in the cases of Aditya Cement and Ispat Industries, holding that as a recipient of the 'consulting engineer' service from outside India, the appellant was not liable to pay service tax before 1-1-2005. This decision was in line with the interpretation of the relevant notifications and rules governing service tax liability.

In conclusion, the Tribunal's judgment in this case clarifies the service tax liability of the respondent for services provided by their Foreign Agents before 1-1-2005. The decision was based on the interpretation of relevant notifications and rules, as well as the precedents set by earlier Tribunal decisions. The rejection of the revenue's appeals signifies the Tribunal's adherence to established legal principles in determining service tax liability in such cases.