2009 (11) TMI 67 - HC - Service Tax

Import of service Section 66A held that - is nothing in Section 66A or Section 2(1)(d)(iv) which may lead to a conclusion that earlier to 18.4.2006 the legislature intended imposition of tax on the services received by a recipient in India from outside India - Earlier to the enforcement of Section 66A there was no authority vested by law in the revenue to levy service tax on a person who is resident in India but who receive services from a person resident outside India. Till the time Section 66A was enacted only the person who rendered the service was liable to pay tax and not the recipient of the service.

Summary

Issues:
1. Whether service tax was leviable on the recipient of service irrespective of Section 66-A of the Finance Act?
2. Whether non-supply of information to the department regarding overseas commission with the intention to evade service tax amounts to suppression of facts and invokes the extended period of limitation?

Analysis:
1. The case involved an appeal by the revenue under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The dispute revolved around the imposition of service tax on the recipient of services provided by overseas commission agents. The Tribunal had ruled in favor of the assessee, holding that prior to the enforcement of Section 66A of the Finance Act, the revenue did not have the authority to levy service tax on the recipient of services received from outside India. The High Court concurred with this view, citing judgments from the Bombay and Delhi High Courts, emphasizing that the legislative intent was clear only after the enforcement of Section 66A in 2006.

2. The second issue pertained to the allegation of suppression of facts by the assessee regarding overseas commission, leading to the demand for service tax. The Adjudicating Authority had confirmed the demand and imposed a penalty, which was later set aside by the Commissioner (Appeals) on the grounds of limitation. The Tribunal upheld this decision, and the High Court affirmed the same, highlighting that the imposition of service tax on the recipient prior to the enactment of Section 66A was not legally supported. Therefore, the appeals were dismissed based on the findings and interpretations of the relevant legal provisions and precedents.

In conclusion, the High Court dismissed the appeals, upholding the view that service tax was not leviable on the recipient of services from outside India before the enforcement of Section 66A of the Finance Act. The judgment relied on the interpretations of the legislative amendments and legal precedents from the Bombay and Delhi High Courts to support its decision.