Service tax on foreign-based services before section 66A was not leviable from the recipient, making the demand unsustainable.

Service tax was not payable by the recipient on services received from foreign-based providers with no office in India for the period before insertion of section 66A of the Finance Act, 1994. Relying on the Board circular and the then-prevailing legal position, the demand for the disputed period was held unsustainable, and consequential relief followed.

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Issues: Whether service tax was leviable on services received from foreign-based service providers for the period prior to insertion of section 66A of the Finance Act, 1994.

Analysis: The disputed period was 01.01.2005 to 16.06.2005. The demand related to services received from foreign-based service providers having no office in India. In light of the Board circular and the legal position that the recipient was not liable to pay service tax on such services before insertion of section 66A, the basis for the demand did not survive.

Conclusion: Service tax was not payable by the recipient for the period prior to insertion of section 66A, and the demand was unsustainable.

Final Conclusion: The appeal was allowed with consequential relief, and the stay petition was disposed of.

Ratio Decidendi: Service tax on services received from foreign-based service providers was not leviable from the recipient for periods prior to insertion of section 66A of the Finance Act, 1994.

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