2017 (1) TMI 715 - AT - Service Tax

Refund claim - Reverse Charge Mechanism - commission to foreign-based commission agents - period involved prior to 18.04.2006 - Held that - in the case of M/s Indian National Ship Owners Association Vs. Union of India 2008 (12) TMI 41 - BOMBAY HIGH COURT , it was held that Service Tax on the services provided by respondent or from outside India, who does not have any office in India, was not leviable prior to 18.04.2006 - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim of Service Tax paid by the respondent for services provided by foreign-based commission agents.
2. Interpretation of Rule 2(1)(d)(iv) of Service Tax Rules, 1994.
3. Liability for payment of Service Tax under reverse mechanism.
4. Precedents related to the leviability of Service Tax prior to 18.04.2006.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner (Appeals), Kanpur, regarding the refund claim of Service Tax paid by the respondent for services provided by foreign-based commission agents. The respondent claimed that since the services were performed and received outside India, they were not liable to pay Service Tax and sought a refund. The Original Authority rejected the refund application, but the Ld. Commissioner (Appeal) allowed the refund for the period prior to 18.04.2006, citing the absence of legal authority for service recipients to discharge Service Tax liability before that date.

2. The Revenue emphasized Rule 2(1)(d)(iv) of Service Tax Rules, 1994, arguing that rules framed under statutory provisions should be considered part of the statute. The Tribunal considered this argument in light of the case law precedent of Associated Cement Co. Ltd. Vs. Commercial Tax Officer, Kota, highlighting the importance of interpreting rules within the statutory framework.

3. The issue of liability for payment of Service Tax under the reverse mechanism was examined by the Ld. Commissioner (Appeal), who differentiated between the period before and after 18.04.2006. It was noted that prior to the introduction of charging Section 66A of the Finance Act, 1994, Service Tax on services provided by entities outside India without an office in India was not leviable. This interpretation was supported by precedents from the Hon'ble High Courts of Mumbai and Delhi.

4. Regarding the leviability of Service Tax prior to 18.04.2006, the Tribunal referenced the decisions of the Hon'ble High Courts of Mumbai and Delhi, which established that Service Tax on services provided from outside India by entities without a presence in India was not applicable before the specified date. Based on this legal interpretation and precedent, the Tribunal dismissed the Revenue's appeal, upholding the findings of the Ld. Commissioner (Appeal).

This comprehensive analysis of the judgment highlights the key issues addressed, legal interpretations made, and the final decision rendered by the Tribunal in favor of the respondent.