Appellant not liable for service tax pre-2005 on foreign consulting engineer services.

The Tribunal ruled that the appellant, as a recipient of consulting engineer services from outside India, was not liable to pay service tax prior to 1-1-2005. The decision aligned with a Larger Bench ruling that the recipient of taxable services from outside India becomes liable for service tax only from 1-1-2005. Consequently, the Tribunal set aside the tax liability imposed on the appellant for services received from the foreign collaborator before 1-1-2005, allowing the appeal and rendering the Revenue's penalty enhancement appeal moot.

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Issues involved:
Service tax liability for payments made to foreign collaborator for technical know-how/assistance received prior to 1-1-2005.

Analysis:
The Appellate Tribunal, in this case, addressed the issue of service tax liability concerning payments made to a foreign collaborator for technical know-how/assistance received by the appellant before 1-1-2005. The authorities below had confirmed service tax against the appellant for the period from 1-4-2002 to 31-3-2003. However, the Tribunal referred to a Larger Bench decision in the case of Hindustan Zinc Ltd. v. CCE, which held that the recipient of taxable services from outside India becomes liable to pay service tax only from 1-1-2005, as per Notification No. 36/2004-Service Tax, dated 31-12-2004, effective from 1-1-2005.

The Tribunal concurred with the Larger Bench decision and held that the appellant, as a recipient of consulting engineer service from outside India, was not liable to pay service tax prior to 1-1-2005. Therefore, the Tribunal ruled that the appellant is not liable to pay any tax in respect of services received from the foreign collaborator before 1-1-2005. The Tribunal set aside the impugned order on this ground and allowed the appeal with consequential relief to the appellant. Additionally, the Tribunal noted that other contentions raised by the appellant were not commented upon, and the Revenue's appeal for the enhancement of penalty became infructuous due to setting aside the impugned order.

In conclusion, the Tribunal's judgment clarified the service tax liability for payments made to a foreign collaborator for technical know-how/assistance received before 1-1-2005, aligning with the decision of the Larger Bench regarding the effective date for the recipient of taxable services from outside India to become liable for service tax payment.

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