2009 (10) TMI 470 - AT - Service Tax

Stay- Demand- The issue involved in this case is regarding Service tax liability for the services rendered by the appellant in Nepal for Nepali customers. Services rendered outside India not liable to Service Tax in India. Held that- pre-deposit waived. Recovery stayed.

Summary

Issues:
Service tax liability for services rendered in Nepal for Nepali customers.

Analysis:
The judgment pertains to a case involving the condonation of delay in filing an appeal and the waiver of pre-deposit of Service tax amount along with interest and penalty. The applicant filed a COD application for condonation of a four-day delay in filing the appeal, which was allowed by the Tribunal. The stay application for waiver of pre-deposit of Service tax amount and penalty was taken up for disposal.

The main issue in this case revolved around the Service tax liability for services provided by the appellant in Nepal for Nepali customers. The appellant argued that they are not liable to pay Service tax for FOD delivery services in Nepal as the services were rendered outside India. They contended that since the amounts received were accounted for in Nepal and not in India, the services provided in Nepal should not be considered taxable services. The appellant also highlighted that they are regularly paying Service tax for services rendered within India.

On the other hand, the respondent argued that the appellant, being an Indian Registered Company with centralized billing in Hyderabad, is liable to pay Service tax as the payments received do not fall within the ambit of convertible foreign currency. After hearing both sides and examining the records, the Tribunal found that the Service tax liability arose from services provided in Nepal for Nepali customers. The Tribunal noted that the amounts received were accounted for in Nepal, and as per Section 64(1) of the Finance Act, 1994, services provided outside India are not taxable in India.

The Tribunal concluded that the appellant had made a prima facie case for the waiver of pre-deposit of the amounts confirmed in the impugned order. Consequently, the application for waiver of pre-deposit was allowed, and the recovery of the amounts was stayed pending the disposal of the appeal. The judgment highlighted the importance of the specific provisions of the Finance Act, 1994 in determining the tax liability for services provided outside India, emphasizing the territorial scope of taxation laws.