2009 (10) TMI 490 - AT - Service Tax

Reverse Charges - The issue involved in this case is regarding Service Tax liability on the appellant as a recipient of the services for the period 1-7-2003 to 31-12-2006. It is held by the Adjudicating Authority that the appellant/applicant is rendering the services of Business Auxiliary Services as they are giving payment as commission to the Commission Agents appointed abroad. Held that - in the light of the decision of Indian National Shipowners Association v. Union of India 2009 -TMI - 32013 - HIGH COURT OF BOMBAY, the provision of reverse charge introduced on 18.04.2006 thus the demand till this date cannot be made after this date assessee shall pay service tax.

Summary

Issues:
Service Tax liability on the appellant as a recipient of services for the period 1-7-2003 to 31-12-2006.

Analysis:
The case involves a dispute regarding the Service Tax liability on the appellant as a recipient of services for the period 1-7-2003 to 31-12-2006. The Adjudicating Authority determined that the appellant was providing "Business Auxiliary Services" by paying commission to Commission Agents appointed abroad. The appellant argued that they are not liable to pay service tax for the period before 18-4-2006 as Section 66A came into effect only from that date. They cited a decision of the Hon'ble High Court of Bombay and the Hon'ble Supreme Court to support their position. The appellant contended that the services provided by the Commission Agent in London for sales in countries like UK, USA, Europe, and Australia were not taxable. Additionally, they claimed that the show-cause notice issued on 16-7-2007 was time-barred.

The JCDR disagreed with the appellant's justification, asserting that service tax liability from 18-4-2006 onwards should be paid by the appellant. After considering the arguments from both sides and examining the records, the Tribunal found that the appellant, as a recipient of services situated abroad, was not liable to pay service tax before 18-4-2006. The Tribunal noted that the appellant failed to establish a prima facie case for a complete waiver of the service tax liability post 18-4-2006. Consequently, the Tribunal directed the appellant to pre-deposit Rs. 35,00,000 within 12 weeks and report compliance by 25-1-2010. Upon compliance, the pre-deposit requirement for the remaining amounts was waived, and recovery was stayed pending the appeal's disposal.