2017 (12) TMI 506 - AT - Service Tax

Non-payment of service tax - commission amount paid to the foreign travel agent - reverse charge mechanism - Held that - The fact is not under dispute that whenever the foreign tourists planned to visit India, they approached the overseas agents for necessary guidance for booking of accommodation in India - the appellant is not in the picture as far as receipt of any taxable service from the overseas clients is concerned. Since the services were provided and consumed outside India, the appellant will not be liable to Service Tax under reverse charge mechanism in terms of Section 66A of the FA, 1994 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on commission amount paid to foreign travel agent under reverse charge mechanism. Applicability of Service Tax in India for services provided and consumed outside India. Sustainability of Service Tax demand for specific periods. Bar on limitation of time for proceedings.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Customs and Central Excise, Jaipur, regarding the non-payment of service tax on commission amount paid to a foreign travel agent under the reverse charge mechanism. The appellant, registered with the Service Tax Department, was found to have not paid service tax during the financial years 2006-07 to 2007-08. The appellant argued that the services provided by overseas agents for booking accommodation in their hotel were consumed outside India and thus not liable for service tax under reverse charge mechanism.

The appellant contended that they did not advise foreign clients to approach overseas agents for booking accommodation, and as the services were provided and consumed outside India, they should not be liable for service tax under reverse charge mechanism. The appellant also raised points regarding the applicability of service tax prior to specific dates and the limitation of time for proceedings. The appellant cited the judgment of the Hon'ble Supreme Court in a relevant case to support their arguments.

The Department, represented by the ld. D.R., maintained the findings of the impugned order. However, after hearing both sides and reviewing the records, the Tribunal found that the appellant was not involved in receiving any taxable service from overseas clients. As the services were provided and consumed outside India, the Tribunal held that the appellant would not be liable for service tax under the reverse charge mechanism. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the services provided and consumed outside India did not attract service tax liability under the reverse charge mechanism. The judgment highlighted the importance of the location of service provision and consumption in determining service tax liability.