Service Tax on Foreign Selling Commission: Recipient Liable Under Reverse Charge Mechanism for Business Auxiliary Services

CESTAT held that appellant was liable to pay service tax on selling commission under reverse charge mechanism. The selling agent services provided by M/s. Parah from UAE to appellant in India constituted "business auxiliary service" under Section 65(105)(zzb) of Finance Act, 1994. Per Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994, appellant as recipient was required to discharge service tax liability. However, CESTAT modified the order by restricting demand to normal period of limitation due to revenue neutrality, noting that mere non-registration and non-filing of returns cannot justify extended period invocation. Penalties under Sections 77(2) and 78 were set aside. Appeal partially allowed. .....

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