2010 (10) TMI 968 - AT - Service Tax

Liability for Service Tax on Non-Residents: Tribunal Rules Recipient Not Liable Pre-April 18, 2006

Commissioner of Central Excise, Guntur Versus Agri Gold Exims Ltd.

The Tribunal dismissed the Revenue's appeal, affirming that the liability to pay service tax for services received from non-residents before April 18, ... - Issues:Interpretation of Service Tax Rules regarding liability to pay service tax for services received from non-residents before and after April 18, 2006.Analysis:1. Issue of Liability Before April 18, 2006:The case involved a dispute regarding the liability of the recipient of services to pay service tax for services received from non-residents before April 18, 2006. The Revenue authorities contended that the recipient should discharge the service tax liability under rule 2(1)(d)(iv) of the Service Tax Rules, 1994. However, the Commissioner (Appeals) set aside the demand of service tax, relying on various judgments and the interpretation of the relevant provisions. The Tribunal noted that the law was settled that the provisions of rule 2(1)(d)(iv) could not be applied for recovery of service tax before April 18, 2006, when section 66A came into effect.2. Judicial Precedents and Interpretation of Law:The Tribunal considered the judgments of the High Court of Bombay and other cases cited by the respondent's consultant, which clarified the liability of the recipient for service tax on services received from non-residents. These judgments established that the liability to pay service tax on such services arose from April 18, 2006, onwards. The Tribunal found that the issue was conclusively settled by the Supreme Court's dismissal of the Revenue's Special Leave Petition (SLP) against the High Court's judgment, reinforcing the legal position established by the earlier decisions.3. Dismissal of Revenue's Appeal:Based on the legal precedents and the dismissal of the Revenue's SLP by the Supreme Court, the Tribunal concluded that the appeal filed by the Revenue lacked merit. Consequently, the Tribunal dismissed the Revenue's appeal and disposed of the cross-objection. This decision affirmed the position that the liability to pay service tax for services received from non-residents before April 18, 2006, did not fall on the recipient, as clarified by the relevant legal provisions and judicial interpretations.This detailed analysis of the judgment highlights the key issues surrounding the interpretation of Service Tax Rules and the liability of recipients for service tax on services received from non-residents, providing a comprehensive overview of the legal reasoning and conclusions reached by the Tribunal.