2009 (8) TMI 397 - AT - Service Tax

Services received from outside India- Reverse charges- The appellants herein are the recipients of services and are liable to discharge service tax liability as provided by provisions of rule 2(1)(d)(iv) of Service Tax Rules, 2002 on the ground that as service providers being non-resident or from outside and do not have office in India, service tax liability needs to be discharged by the service receiver/appellant. In the light of the decision of Indian National Shipowners Association v. UOI 2009 -TMI - 32013 - HIGH COURT OF BOMBAY held that- service tax liability on the recipient of the services would arise only from 18.4.2006 set aside the impugned order and appeal is allowed.

Summary

Issues:
1. Non-payment of service tax liability for 'Intellectual Property Services' and 'Business Auxiliary Services.'

Analysis:

1. The appellants were charged with non-payment of service tax liability for services received under 'Intellectual Property Services' and 'Business Auxiliary Services.' The Adjudicating Authority held that as service providers were non-resident, the service tax liability needed to be discharged by the service receiver/appellant. The appellants contested the show-cause notice, but the authority confirmed the duty liability and imposed penalties and interest. The main issue was whether the recipient of the service is liable to pay service tax based on the service provider being non-resident.

2. The appellants argued that service tax liability on the recipient only came into effect from 18-4-2006, citing relevant case law. The Service Tax Department contended that the services received fell under taxable categories, and the liability arose from specific dates. The Tribunal referred to judgments by the Hon'ble High Court of Bombay and the Hon'ble High Court of Delhi, which clarified that service tax liability on the recipient arises from a later date.

3. The Tribunal noted that the issue had been settled by the Hon'ble High Courts, emphasizing that service tax liability on the recipient of services would arise only from 18-4-2006. Citing the judgments, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief. The decision was based on the legal position established by the higher courts, providing relief to the appellants in both cases.