Tribunal grants waiver, rules in favor of assessee on Service Tax liability under reverse charge

The Tribunal allowed the application for waiver of pre-deposit and ruled in favor of the assessee in a case concerning liability to discharge Service Tax under reverse charge mechanism on export sale commission paid to a foreign agent. The Tribunal noted that the issue had been settled by the Supreme Court and a circular clarified that the Service Tax liability would not arise on the recipient of services before a specific date. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

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Issues: Liability to discharge Service Tax under reverse charge mechanism on export sale commission paid to foreign agent.

In this case, a Stay Petition was filed for the waiver of pre-deposit of Service Tax, interest, and penalties under Sections 78 and 76 of the Finance Act, 1994, amounting to Rs.13,62,562. The Tribunal found that the appeal could be disposed of promptly as the issue was narrow. The Tribunal allowed the application for waiver of pre-deposit and proceeded to hear the appeal. The central issue revolved around the liability to discharge Service Tax under the reverse charge mechanism on export sale commission paid to a foreign agent. The period in question was prior to 18.04.2006. The Tribunal noted that the issue had already been settled by the Hon'ble Supreme Court in the case of Indian National Shipowners Association. Additionally, a circular issued by the CBE&C clarified that the Service Tax liability would not arise on the recipient of services before 18.4.06. Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the assessee.

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