2009 (5) TMI 375 - AT - Service Tax

Services received from outside India- Reverse Charges-Assessee company paid commission to a non-resident for receiving certain services. The dispute is for the period prior to 16.06.2005, revenue demand the service tax. In the light of the judgment of Indian National Shipowners Association v. Union of India 2009 -TMI - 32747 - BOMBAY HIGH COURT, held that section of reverse charge introduced from 18.04.2006, thus dismiss the appeal filed by the revenue.

Summary

Issues:
Service tax liability on commission received for services provided by a non-resident.

Analysis:
The case involved a dispute regarding the service tax liability on the commission received by the respondents for services provided by a non-resident. The Adjudicating authority confirmed the duty of service tax liability and imposed penalties. However, on appeal, the ld. Commissioner (Appeals) set aside the impugned order by analyzing various provisions of the Finance Act, 1994. The Commissioner noted that initially, the Act did not clearly specify the taxation of services rendered from abroad to be considered as taxable services in India. This position was altered by an Explanation inserted in 2005, which deemed services provided from outside India to be taxable if received by a person in India. The Commissioner highlighted the retrospective application of this Explanation, providing a legal basis for the recovery of service tax from the service recipient in India. The Commissioner also referred to relevant case laws supporting the contention that service tax cannot be levied on services provided outside India for the period before 2005.

The Commissioner's decision was further supported by a judgment of the Hon'ble High Court of Bombay in a related case. The High Court's ruling reinforced the position that service tax cannot be recovered from the recipient of services provided from abroad in India for the period prior to 2005. In light of these legal interpretations and precedents, the appeal filed by the Revenue was dismissed, and the impugned order was upheld. The Tribunal's decision was based on a thorough analysis of the statutory provisions, explanations, notifications, and relevant case laws, ensuring a comprehensive understanding and application of the law in determining the service tax liability in the case at hand.