Appeal rejected: No service tax on foreign company for pre-2006 services in India

The Tribunal dismissed the appeal, affirming that service tax could not be imposed on the foreign company for services received in India before 18/4/2006. The decision was based on the precedent that a foreign company without a business establishment in India was not liable for service tax prior to 2002, as established in Philcorp PTE Ltd. v. Commissioner of Central Excise Goa. This ruling favored the foreign respondent, concluding the matter in their favor.

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Issues:
- Appeal against order setting aside service tax demand and penalties
- Liability of foreign company for service tax on services received in India
- Applicability of service tax to Indian recipient of services imported from abroad pre-18/4/2006

Analysis:
1. The appeal was filed by the department challenging the order of the Commissioner (Appeals) setting aside the demand of service tax and connected penalties on two companies, including a foreign respondent without any office in India. The department alleged that Consulting Engineers Service was received by an Indian company from the foreign company under agreements from March 1998 to April 2001. The adjudicating authority held the foreign company liable for tax and penalties, which was then appealed by the company.

2. The Tribunal considered settled law that service tax cannot be imposed on an Indian recipient for services imported from abroad before 18/4/2006 when Section 66A of the Finance Act 1994 was enacted. Citing the case of Philcorp PTE Ltd. Vs. Commissioner of Central Excise Goa, it was noted that a foreign company without a business establishment in India was not liable to pay service tax for a period before 2002. The Tribunal acknowledged the relevance of this precedent in the present case, supporting the foreign respondent's position.

3. Consequently, the Tribunal dismissed the appeal, affirming the position that service tax could not be levied on the foreign company for services received in India before the specified date. The judgment was pronounced and dictated in open court, concluding the matter in favor of the respondent based on the legal principles and precedents discussed during the hearing.

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