2009 (3) TMI 24 - AT - Service Tax

Whether activities undertaken by the foreign company provided to the appellant company would come under the purview of Service Tax as Consulting Engineer - foreign companies have no office in India - period of dispute is January, 2003 to March, 2004 - In view of Notification No. 36/2004 and decision of Larger Bench of Tribunal in case of M/s. Hindustan Zinc Ltd, held that service provided by the foreign companies who has no office in India demand of tax is not sustainable prior to 1.1.2005

Summary

Issues:
Whether activities undertaken by foreign companies without an office in India would be subject to Service Tax as "Consulting Engineer" prior to 1.1.2005.

Analysis:
The Appellate Tribunal, CESTAT, New Delhi, considered the issue of whether services provided by foreign companies, M/s. Siemens AG of Germany and M/s. OTO Melara of Italy, to the appellant company would fall under the purview of Service Tax as "Consulting Engineer" before 1.1.2005. The Advocate for the Appellant referred to the case of M/s. Hindustan Zinc Ltd. vs. CCE, Jaipur, where the Larger Bench of the Tribunal had ruled that a recipient of service from a non-resident entity without an office in India was not liable to pay service tax before 1.1.2005, even with the amendment in Rule 2(1)(d) of the Service Tax Rules under Notification No. 12/2004.

The Tribunal concurred with the decision of the Larger Bench in the case of Hindustan Zinc Ltd. and held that the service provided by foreign companies without an office in India did not attract tax liability prior to 1.1.2005. Therefore, the demand for tax on the services provided by the foreign companies was deemed unsustainable before the specified date. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal's ruling clarified that services provided by non-resident foreign companies without an office in India, such as M/s. Siemens AG of Germany and M/s. OTO Melara of Italy, as "Consulting Engineer" were not subject to Service Tax liability before 1.1.2005, based on the interpretation of relevant legal provisions and precedents set by the Larger Bench of the Tribunal in similar cases.