Appellant not liable for service tax pre-2005 under Rule 2(1)(d)(iv)

The Tribunal held that the appellant was not liable to pay service tax for engineering consultancy services received from foreign companies before 1.1.2005, as per Rule 2(1)(d)(iv) and the precedent set by the Larger Bench decision in M/s. Hindustan Zinc Ltd. vs. CCE, Jaipur. The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief.

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Issues:
Service tax liability for payments made to foreign companies for engineering consultancy services prior to 16.8.2002.

Analysis:
The appellant received engineering consultancy services from foreign companies, and service tax was demanded for the payments made to them. The issue revolved around the applicability of service tax prior to 16.8.2002 under Rule 2(1)(d)(iv) of the Service Tax Rules. The Commissioner (Appeals) noted that the appellant could not be held liable to pay service tax before 16.8.2002 as per the rule, which stated that a service receiver cannot be made liable for service tax on behalf of a non-resident or a person from outside India without an office in India. The appellant relied on the decision of the Larger Bench in M/s. Hindustan Zinc Ltd. vs. CCE, Jaipur, which clarified that a recipient of taxable service from a non-resident without an office in India was not liable to pay service tax before 1.1.2005, despite amendments in the Service Tax Rules. The Tribunal concurred with this view, holding that the appellant, as a recipient of consulting engineer services from outside India, was not liable to pay service tax before 1.1.2005, in line with the decision in the Hindustan Zinc case.

In conclusion, the Tribunal, following the precedent set by the Larger Bench decision in the Hindustan Zinc case, found the impugned order unsustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief. The judgment clarified the non-liability of the appellant to pay service tax for engineering consultancy services received from foreign companies before 1.1.2005, in accordance with the provisions of Rule 2(1)(d)(iv) and the interpretation provided by the Larger Bench decision.

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