Recipient liability for service tax on foreign technical assistance failed for the period before section 66A took effect.

Recipient liability for service tax on technical assistance received from a foreign company could not be fastened for the period before section 66A of the Finance Act, 1994 came into force. The demand proceeded on the basis that the foreign provider had no office in India, but the settled legal position, as applied by the CESTAT, was that no service tax could be recovered from the recipient for such foreign services prior to 18.04.2006. The liability was therefore not sustainable for the disputed period, and the Revenue's challenge failed.

---

---

Issues: Whether the recipient in India was liable to pay service tax on technical assistance received from a foreign company for the period prior to insertion of section 66A of the Finance Act, 1994.

Analysis: The demand was founded on the premise that the foreign service provider had no office in India and, therefore, the recipient was liable to discharge service tax under the service tax rules. The governing legal position, as settled by the Bombay High Court, was that prior to the enactment of section 66A with effect from 18.04.2006, service tax could not be fastened on the recipient of services from a foreign company. Since the period in dispute was prior to that date, the liability could not be sustained.

Conclusion: The respondent was not liable to service tax for the relevant period, and the Revenue's appeal failed.

---