2018 (7) TMI 1000 - AT - Service Tax

Liability of service tax - Reverse charge mechanism - appellant, manufacturer and exporter of printed circuit board, was making payment to their overseas agencies as commission for providing services - services received during the period from 09.07.2004 to 31.03.2005 - Held that - The issue involved in the present case is settled in favor of the appellant as the period involved in the present case is prior to 18.04.2006 when there was no service tax liability on the recipient of service - The ratio of the decision of Indian National Ship Owners Association 2008 (12) TMI 41 - BOMBAY HIGH COURT is fully applicable in the present case, where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service. Explanation below section 65(105) did not give any authority to levy service tax on import of services - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of service tax on the appellant for services received from overseas agencies.
2. Applicability of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994.
3. Validity of the impugned order passed by the Commissioner (Appeals).
4. Interpretation of the relevant legal provisions prior to 18.04.2006.

Analysis:
1. The appellant, a manufacturer and exporter of printed circuit boards, made payments to overseas agencies as commission for various services. The Department directed the appellant to pay service tax on these services received during a specific period. The appellant contested the demand but paid a certain amount and obtained service tax registration. A show-cause notice was issued, leading to the adjudicating authority confirming the demand and imposing penalties under various sections of the Finance Act. The Commissioner (Appeals) upheld this decision, prompting the appellant to file the present appeal.

2. The appellant argued that the impugned order ignored binding judicial precedent, specifically citing a case from the Bombay High Court. The appellant highlighted that the period in question predated an amendment that imposed service tax liability on the recipient of services, thus asserting that the demand should be set aside. The appellant also referenced a decision by a Division Bench of the Tribunal regarding the taxability of services received from outside India before the aforementioned amendment.

3. The Appellate Tribunal, after considering the submissions and relevant legal precedents, found in favor of the appellant. The Tribunal noted that the issue had been settled in previous cases and that the demand for service tax for the period before the relevant amendment was not sustainable. By applying the ratio of the decision from the Bombay High Court and the Tribunal's previous ruling, the Tribunal set aside the impugned order, allowing the appeal of the appellant with any consequential relief.

This detailed analysis covers the liability of the appellant for service tax, the interpretation of relevant legal provisions, and the Tribunal's decision to set aside the impugned order based on established legal principles and precedents.