Recipient liability for import of services arose only from 18.04.2006; earlier service tax demand could not stand.

Service tax on services received from a foreign-based provider was held not payable by the recipient for the period prior to 18.04.2006, because the prevailing legal position treated recipient liability as arising only from that date. The Tribunal noted that Board instructions to field formations reflected this position, so the demand sustained by the original authority could not be maintained for the earlier period. The department's challenge therefore failed.

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Issues: Whether service tax was payable on the recipient of services received from a foreign-based party for the period prior to 18.04.2006.

Analysis: The dispute concerned liability to service tax on services received from outside India during the relevant period. The Tribunal noted that the field formations had already been instructed by the Board in the light of the prevailing legal position that liability on the recipient would arise only from 18.04.2006. In that view, the demand sustained by the original authority could not be maintained for the period in question.

Conclusion: Service tax was not payable on the recipient for the period prior to 18.04.2006, and the department's appeal failed.

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