2008 (1) TMI 225 - AT - Service Tax

Import of services - dispute relates to levy of service tax under Section 66 of the Finance Act - by virtue of Section 66A inserted by the Finance Act, 2006, if any service specified in clause (105) of Section 65 is received by a person in India, such service is to be treated as taxable service and the recipient thereof is liable to pay service tax said provision came into force w.e.f.18.4.06, hence service recipient not liable to tax for the period prior to that- stay granted

Summary

Issues:
- Application for waiver of pre-deposit of duty and penalty.
- Dispute regarding levy of service tax under Section 66 of the Finance Act, 1994.
- Interpretation of Rule 2(1)(d) of the Service Tax Rules regarding the liability to pay service tax.
- Comparison with past notifications and amendments.
- Reference to a previous Tribunal order in a similar case.

Analysis:
The judgment deals with applications for waiver of pre-deposit of duty and penalty by the appellant. The appeals were against the Commissioner (Appeals) order dismissing appeals against the Assistant Commissioner of Excise's order. The dispute revolves around the levy of service tax under Section 66 of the Finance Act, 1994. The amendment brought in rule 2(1)(d) of the Service Tax Rules made the person receiving taxable service in India liable to pay service tax. This amendment was challenged, questioning whether it could create a liability to pay the service tax. The Tribunal analyzed the rule, emphasizing that a definition clause is not a substantive provision of the statute and should not be read as creating liability. The legislative intent behind the insertion of Section 66A in 2006 was also considered in this context.

Moreover, the judgment referred to past notifications and amendments, highlighting that recipients were previously made liable to pay service tax by Notification No. 36/2004-05 and an explanation inserted in sub-clause (105) of Section 65 by the Finance Act, 2005. The Tribunal discussed the relevance of these historical changes in the context of the current dispute. Additionally, the Revenue relied on a previous Tribunal order in the case of Samcor Glass Ltd. v. CCE, Jaipur-I, where a similar interpretation of Rule 2(1)(d) was made. However, the Tribunal noted that the order was an interlocutory order and not conclusive. Despite the reference to the previous order, the Tribunal found a strong prima facie case for the waiver of deposit until the appeal's disposal and granted the waiver accordingly.

In conclusion, the judgment provides a detailed analysis of the issues surrounding the waiver of pre-deposit of duty and penalty, the interpretation of Rule 2(1)(d) of the Service Tax Rules, and the comparison with past notifications and amendments. The Tribunal's decision to grant the waiver was based on a thorough examination of the legal provisions and precedents in the field of service tax liability.