Imported service tax liability arises only after Section 66A; further pre-deposit cannot block merits review once tax is paid.

Service tax on services received from abroad was confined to the period after Section 66A of the Finance Act, 1994 came into force on 18.4.2006, because that provision alone created the deeming fiction taxing imported services. The tax attributable to the period held taxable had already been paid, so no further liability survived for that segment. Where the taxable portion of the demand stood discharged and the dispute still required merits adjudication, dismissal of the appeal for non-compliance with pre-deposit was unwarranted; the matter was restored and remanded for decision on merits without insisting on further pre-deposit.

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Issues: (i) Whether service tax could be demanded on services received from abroad for the period prior to the introduction of Section 66A of the Finance Act, 1994, and whether the appellant had discharged the tax liability for the period after that provision came into force; (ii) whether the dismissal of the appeal for non-compliance with the pre-deposit requirement under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 should be set aside and the matter remanded without further pre-deposit.

Issue (i): Whether service tax could be demanded on services received from abroad for the period prior to the introduction of Section 66A of the Finance Act, 1994, and whether the appellant had discharged the tax liability for the period after that provision came into force.

Analysis: Section 66A treats services specified in Section 65(105) provided by a person outside India and received by a person in India as taxable services, with the recipient deemed to have provided the service in India. On the facts, the liability for the services received during the relevant period was confined to the period after 18.4.2006, when Section 66A came into force, and the appellant had already paid the service tax due for that period.

Conclusion: The service tax liability was confined to the period from 18.4.2006 to 27.9.2006, and the tax due for that period stood paid.

Issue (ii): Whether the dismissal of the appeal for non-compliance with the pre-deposit requirement under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 should be set aside and the matter remanded without further pre-deposit.

Analysis: Since the appellant had already deposited the tax attributable to the period held taxable and the dispute required examination on merits, the appeal could not be finally rejected on the basis of further pre-deposit. The proper course was to permit adjudication on merits with an effective hearing.

Conclusion: The dismissal for non-compliance with pre-deposit was set aside and the matter was remanded to the lower appellate authority to decide the appeal on merits without insisting on further pre-deposit.

Final Conclusion: The appeal was restored to the lower appellate authority for merits adjudication, and the appellant obtained relief against the insistence on further pre-deposit.

Ratio Decidendi: Where the taxable portion of the demand has already been paid and the dispute requires merits adjudication, insistence on further pre-deposit should not foreclose consideration of the appeal, and remand for a decision on merits is appropriate.

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