Imported intellectual property services were not liable to service tax before section 66A came into force.

Service tax on intellectual property services received from a foreign provider was not exigible for October 2004 to September 2005 because the charging mechanism for services imported from abroad under section 66A of the Finance Act, 1994 came into force only on 18 April 2006. The recipient's liability in India depended on the existence of a valid charging provision during the relevant period, and binding precedent had already held that tax could not be demanded before section 66A was introduced. The demand was therefore unsustainable and the assessee succeeded.

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Issues: Whether service tax was payable on intellectual property services received from a foreign service provider during the period October 2004 to September 2005.

Analysis: The liability of a recipient in India for services received from abroad depends on the existence of a charging provision covering such services during the relevant period. Section 66A of the Finance Act, 1994, which created the charging mechanism for services received from outside India, came into force only on 18.04.2006. For the period in dispute, the issue was already covered by binding precedent holding that such tax could not be demanded prior to the introduction of that provision.

Conclusion: Service tax was not payable for the relevant period and the demand was unsustainable, in favour of the assessee.

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