2019 (2) TMI 92 - AT - Service Tax

Levy of Service tax - commission paid to foreign agents - reverse charge mechanism - period from 18.4.2006 to 31.3.2009 - exemption under N/N. 14/2004-ST dated 10.9.2004 - Held that - The similar issue as to the demand of service tax for services of overseas commission agents for procurement of orders was analyzed by the Tribunal in the case of Texyard International 2015 (8) TMI 794 - CESTAT CHENNAI . The Tribunal in the said case observed that the assessee is eligible for exemption of the Notification 14/2004-ST dated 10.9.2004 - demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of service tax on commission paid to overseas agents under reverse charge mechanism.
2. Exemption under Notification No. 14/2004-ST dated 10.9.2004.
3. Interpretation of previous Tribunal decisions on similar issues.

Analysis:
1. The appellant had engaged overseas commission agents for procuring orders for 'Hosiery Garments' and paid commission without paying service tax under reverse charge mechanism. A show cause notice was issued for demanding service tax, interest, and penalties for the period from 18.4.2006 to 31.3.2009. The original authority and Commissioner (Appeals) confirmed the demand. The appellant argued that the services are exempted under Notification No. 14/2004-ST dated 10.9.2004. Reference was made to the Tribunal's decision in Texyard International case and M/s. KPR Cotton Mills Pvt. Ltd. case to support the exemption claim.

2. The Tribunal analyzed the issue of service tax demand for services of overseas commission agents in previous cases like Texyard International and M/s. KPR Cotton Mills Pvt. Ltd. The Tribunal observed that the assessee is eligible for exemption under Notification 14/2004-ST dated 10.9.2004. Following the decisions in these cases, the Tribunal held that the demand cannot be sustained. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the importance of correctly interpreting legal provisions and relevant notifications to determine the applicability of service tax in cases involving commission payments to overseas agents. The Tribunal's reliance on previous decisions and notifications to grant exemption underscores the significance of consistency and precedent in tax matters.