2017 (1) TMI 1186 - AT - Service Tax

Business auxiliary services - Reverse Charge Mechanism - whether the appellants are liable to pay service tax on the commission paid by them for the services received by them from abroad? - Held that - the issue has been discussed and has attained finality in the case of Indian National Shipowners Association 2009 (3) TMI 29 - BOMBAY HIGH COURT , where it was held that the assessee is not liable to pay service tax under the reverse charge mechanism provided under Section 66A of the Finance Act prior to 18/04/2006 - the demands in respect of the period prior to 18/04/2006 is set aside. Extended period of limitation - Held that - The issue being interpretational and as divergent views were prevailing during that period, we hold that the extended period is not invokable - major part of demand barred by limitation, and set aside - the amounts of ₹ 35,402/- and ₹ 25,311/- are upheld along with interest. The demand pertaining to the period 01/04/2007 to 12/11/2007, would lie within the normal period of limitation involving a demand of ₹ 3,50,817/- - demand confirmed for this part. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues involved:
Whether the appellants are liable to pay service tax on the commission paid for services received from abroad.

Analysis:

Issue 1: Liability to pay service tax on commission paid for services received from abroad
The Tribunal considered whether the appellants were liable to pay service tax on the commission paid by them for services received from abroad. The appellant argued that even if liable, the demand was revenue-neutral due to the eligibility to avail CENVAT credit of the service tax paid. The appellant contended that there was no suppression of facts and a bona fide belief that the services were not taxable. They also relied on a Tribunal decision and argued against the invocation of the extended period of limitation. The Department, on the other hand, supported the findings in the impugned orders, stating that the appellant was liable to pay service tax demand post a certain date. The Tribunal referred to a previous case to determine liability and held that the appellant was not liable to pay service tax before a specific date. The Tribunal also found that part of the demand fell outside the normal period, and due to interpretational issues prevailing during that time, the extended period was not applicable. Consequently, the Tribunal set aside demands prior to a certain date and modified the demands within the limitation period, upholding penalties in some cases and setting them aside in others.

Conclusion:
The Tribunal held that the appellants were not liable to pay service tax on commissions received from abroad before a specific date. It also found that demands falling outside the normal period were not sustainable due to interpretational issues. The Tribunal upheld or set aside demands and penalties based on the specific circumstances of each appeal, providing consequential reliefs where applicable.