Tribunal upholds service tax levy on services abroad, requires pre-deposit

The Tribunal upheld the levy of service tax on services rendered abroad by M/s. Imperial Granites Pvt. Ltd., directing them to make a pre-deposit of the tax amount. The demand for additional service tax was deemed not time-barred due to errors in payment recording. The Tribunal rejected the appellant's claim of no intention to evade tax, ordering the pre-deposit of the tax. The challenge to the levy on services from abroad was dismissed, and pre-deposit was required, with a waiver of balance dues upon compliance and stay on recovery during the appeal. The appeal linkage to a similar case was directed by the Tribunal.

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Issues:
- Challenge to levy of service tax on services rendered abroad
- Time-barred demand for additional service tax
- Intention to evade payment of service tax
- Settlement of issue of levy of service tax by recipient for services from abroad
- Pre-deposit requirement and waiver of balance dues

Analysis:

Challenge to levy of service tax on services rendered abroad:
The case involved M/s. Imperial Granites Pvt. Ltd. engaging commission agents abroad for export orders and paying commission to them. The appellant contended that since the services were rendered abroad, they should not be liable to pay service tax in India. However, the department issued a show-cause notice demanding service tax based on discrepancies in the amount paid to the foreign service provider. The Tribunal held that the issue of levy of service tax from the recipient for services received from abroad had been settled by the High Court and the Apex Court in favor of the Revenue. The Tribunal directed the appellant to make a pre-deposit of the service tax amount.

Time-barred demand for additional service tax:
The appellant argued that the demand for additional service tax was time-barred as the show-cause notice was issued after a lapse of more than one year. However, the Tribunal noted that the error in the amount paid was detected by the department, and the appellant had initially made a wrong entry in their ledger accounts. Subsequently, the correct amount was confirmed, leading to the issuance of a second show-cause notice. The Tribunal held that the demand was not time-barred due to the circumstances of the case.

Intention to evade payment of service tax:
The appellant claimed they had no intention to evade payment of service tax and requested a waiver of pre-deposit. The Tribunal did not accept this plea, considering the discrepancies in the amount paid and the initial suppression of information from the department. The Tribunal directed the appellant to make a pre-deposit of the service tax amount within a specified period.

Settlement of issue of levy of service tax by recipient for services from abroad:
The Tribunal emphasized that the issue of levy of service tax by the recipient for services received from abroad had been conclusively settled in favor of the Revenue by the High Court and the Apex Court. Therefore, the appellant's challenge to the levy on this ground was dismissed.

Pre-deposit requirement and waiver of balance dues:
The Tribunal ordered the appellant to make a pre-deposit of the service tax amount within a specified period. Upon compliance, the pre-deposit of balance dues would be waived, and recovery stayed during the pendency of the appeal. Additionally, the appellant requested the appeal to be linked to another case with similar issues, which the Tribunal directed the Registry to handle accordingly.

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