2017 (10) TMI 1125 - AT - Service Tax

Reverse Charge Mechanism - services availed from a foreign service provider - whether the appellant was required to pay service tax under reverse charge mechanism for the period 2004-2005 to 2006-2007 or not? - Held that - as per the decision of the Hon ble High Court of Bombay in the case of Indian National Shipowners Association 2008 (12) TMI 41 - BOMBAY HIGH COURT , prior to 18/04/2006 appellant was not required to pay service tax, therefore, demand of service tax for the period prior to 18/04/2006 is set aside - For the period post 18/04/2006 the demand of service tax is confirmed along with interest. Penalty - Held that - As issue of taxability of service was in dispute before the Hon ble High Court of Bombay in the case of Indian National Shipowners Association, therefore, no penalty is imposable on the appellant. Matter remanded to recalculate the demand payable - appeal allowed by way of remand.

Summary

Issues:
1. Appeal against demand of service tax, interest, and penalties under Finance Act, 1994.
2. Applicability of reverse charge mechanism for services availed from abroad.
3. Interpretation of Section 66A of the Finance Act, 1994.
4. Imposition of penalties under Sections 76 and 78 of the Finance Act.

Analysis:

1. The appellant appealed against an order confirming the demand of service tax, interest, and penalties under the Finance Act, 1994. The case involved availing services from abroad and the requirement to pay service tax under the reverse charge mechanism.

2. The dispute centered on whether the appellant was obligated to pay service tax under the reverse charge mechanism for the period 2004-2005 to 2006-2007. The appellant contended that as per Section 66A of the Finance Act, 1994, introduced w.e.f. 18/04/2006, service tax was required for services received from a foreign provider.

3. The appellant argued that a High Court decision in the case of Indian National Shipowners Association clarified that service tax under reverse charge mechanism was necessary post 18/04/2006. Consequently, for the period before this date, the appellant was not liable to pay service tax, leading to the setting aside of the demand for that period.

4. The Tribunal acknowledged the High Court's decision and confirmed the demand of service tax along with interest for the period post 18/04/2006. Due to the dispute regarding the taxability of services before the High Court, no penalties were imposed on the appellant under Sections 76 and 78 of the Finance Act.

5. The Tribunal disposed of the appeal by remanding the case to recalculate the demand payable by the appellant in accordance with the decision, thereby providing relief based on the interpretation of the relevant provisions of the Finance Act, 1994.