2017 (7) TMI 491 - AT - Service Tax

Consulting Engineers service - license and technical co-operation agreement - the main contention raised by the respondents before the authorities below is that there is no liability to pay service tax as they are only service recipients and the foreign company viz. SAME, Italy, is the service provider - Held that - the provision that makes the service recipient liable to pay service tax was inserted with effect from August 16, 2002 and that in the instant case, the service if any was received in 1996 which is prior to the insertion of the said provision - reliance was placed in the case of SAME ENGINES INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., CHENNAI 2005 (3) TMI 558 - CESTAT, CHENNAI , wherein the Tribunal set aside the demand observing that the respondents are recipients of service and not service providers - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Liability to pay service tax on manufacturing license and technical co-operation agreement services.
2. Interpretation of service recipient's liability to pay service tax.
3. Applicability of the provision making service recipients liable to pay service tax.
4. Precedent set by Tribunal and Supreme Court judgments on service tax liability.

Analysis:

1. The case involved a dispute regarding the liability to pay service tax on services provided under a manufacturing license and technical co-operation agreement. The department contended that the services fell under the category of "Consulting Engineers" service, leading to a demand for service tax along with penalties. The original authority confirmed the demand, but the Commissioner (Appeal) set it aside, prompting the department to appeal to the Tribunal.

2. The main contention raised by the respondents was that they were service recipients, not service providers, and therefore not liable to pay service tax. They argued that the provision making service recipients liable came into effect after the services were received. The Tribunal's earlier decision in a similar case supported this argument, stating that service recipients were not liable to pay service tax before the provision's enactment.

3. The Tribunal noted that the department had appealed the earlier CESTAT decision to the Supreme Court, which upheld the CESTAT order, dismissing the department's appeal. Based on the Supreme Court's ruling and the precedent set in the appellant's own case, the Tribunal found the appeal devoid of merits and dismissed it accordingly.

4. In conclusion, the Tribunal upheld the principle that service recipients are not liable to pay service tax for services received before the provision making them liable came into effect. The judgment was based on the interpretation of relevant legal provisions and the application of precedents set by both the Tribunal and the Supreme Court in similar cases.