Foreign agent service tax liability pre-2006 absolved by Tribunal

The Tribunal relied on the Bombay High Court's precedent, affirmed by the Supreme Court, to determine that the appellants were not liable for service tax on services received from foreign agents before 18.4.2006. As the period in question preceded this date, the appellants were absolved of any service tax liability related to the services provided by their foreign agents in exporting excisable goods. The Tribunal set aside the lower authorities' decision and allowed the appeals with consequential relief.

---

---

Issues:
Whether the appellants are liable to pay service tax and commission to foreign agents for services received in exporting excisable goods.

Analysis:
The dispute in the present appeals revolves around the liability of the appellants, engaged in manufacturing excisable goods and exporting them, to pay service tax and commission to their foreign agents. The agents in overseas markets assist in exploring business opportunities and procuring export orders, for which they receive commissions based on sales. The period under consideration spans from 9.7.2004 to 31.12.2004.

The lower authorities had confirmed the service tax liability against the appellant, citing various provisions of service tax and notifications. However, the Tribunal, led by Ms. Archana Wadhwa, found the issue to be settled by the Bombay High Court's decision in Indian National Shipowners Association Vs. Union of India (2009). The High Court's ruling established that recipients of services from abroad were not liable to pay service tax before 18.4.2006, when Section 66A of the Finance Act 1994 was enacted. This judgment was further upheld by the Supreme Court in a subsequent appeal by the Revenue in 2010. Given that the period in question predates 18.4.2006, the Tribunal concluded that the appellants were not liable for service tax on services received from foreign agents. Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief.

In summary, the Tribunal's decision was based on the legal precedent set by the Bombay High Court and subsequently affirmed by the Supreme Court regarding the non-applicability of service tax on services received from abroad before 18.4.2006. This ruling absolved the appellants of any service tax liability concerning the services provided by their foreign agents in the export of excisable goods during the specified period.

---