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TMI Blog2010 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... 332-1333/2010 - Dated:- 7-10-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ REPRESENTED BY : S/Shri K.S. Ravi Shankar Ashok Deshpande, Advocates, for the Appellant. Shri D.P. Nagendra Kumar, Jt. CDR, for the Respondent. [Order per : M.V. Ravindran, Member (J)]. - These two appeals are filed against the following Orders-in-Original : Sl. No. Appeal No. Order-in-Original No. date Period of dispute 1. ST/360/2008 7/2008 dated 18-1-2008 7/2003 to 6/2006 2 ST/707/2008 23/2008 dated 6-10-2008 -do- Since the issues involved in both the appeals are interconnected and in respect of the very same assessee, we propose to dispose both the appeals by this common order. 2. The relevant facts that arise for consideration are that the appellant herein provides IT and IT enabled services to their clients across the world. The services rendered by the appellant include development, maintenance and support of software applications, implementation of software packages, supply chain management solutions, development of PC based tools; embedded software and networking solutions for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-in-Original No. 7/2008, dated 28-1-2008/22-2-2008 and the adjudicating authority vide Order-in-Original No. 23/2008, dated 7-10-2008, after following the principles of Natural Justice, passed the following order : ORDER 14. Hence, I order that the penalty is imposed at the rate of Rs. 200/- (Rupees two hundred only) per day up to 17-4-2006 and at the rate of 2% (two per cent) per month of tax due from 18-4-2006 till the relevant date. Aggrieved by such an order, the appellants are before us in appeals. 4. The learned counsel appearing on behalf of the appellant submits that as regards the demand of service tax for an amount of Rs. 12,97,960/- for the period 7/2004 to 6/2006, they are not contesting the said demand but are contesting the imposition of penalty on them. 4.1 As regards the demand of Rs. 4,94,57,132/- for the period 7/2003 to 3/2006, it is the contention that the said amount has been confirmed by the adjudicating authority on the ground that as per provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, the appellant is liable to pay service tax liability as a recipient of services under the category of business auxiliary service , it is his submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon ble Supreme Court on 9-11-2009 [2010 (20) S.T.R. J141 (S.C.)]. It is the submission that Indian Shipowners Association case (supra) would not cover the issue involved in this case. It is the submission that taxable service provided by non-resident and having no establishment in India, the service tax liability will arise from 1-1-2005 on reverse charge mechanism basis. It is also the submission that the issue involved in this case is to be considered from another angle, inasmuch as the services rendered by non-resident or the person not having office or establishment in India, are received in India or being used by persons for executing the order placed on the appellant. It is the submission that the service tax is demanded since the service received by the Indian company for execution of order, service tax liability arises on the appellant. 6. We have considered the submissions made at length by both sides and perused the records. In appeal No. 360/2008, the appellant herein is not contesting the service tax liability of Rs. 12,97,960/- for the period 7/2004 to 6/2006. Since the said service tax liability is not contested by the appellants, the impugned order to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand is liable to be upheld. We do not agree with the findings of the adjudicating authority. It is undisputed fact that in this case, for the period 7/2003 to 3/2006, the appellant had paid an amount of 12% sales value as commission to the people who were non-resident in India or were residing outside India, as an amount payable to them for rendering the services on behalf of the appellants. This is very clearly recorded in the Order-in-Original in paragraphs 2 3. Since it is an admitted fact that the amount is paid by the appellants for rendering services by non-resident and person residing outside India during the relevant period, we find that the judgment of the Hon ble High Court of Mumbai in the case of India National Shipowners Association (supra) squarely covers the issue in favour of the assessee, as the provisions of Section 66A of the Finance Act, 1994, provides for discharge of service tax liability by recipient of services, in reverse charge mechanism will be applicable with effect from 18-4-2006. We find that the issue has been settled by the Hon ble Supreme Court and also by various judgments of the Hon ble High Court of Karnataka as has been indicated herein abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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