2008 (11) TMI 123 - AT - Service Tax

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 ... Liability of recipient for service tax on services received from a non-resident supplier - taxability of services provided from outside India effective from 1-1-2005 under Notification No. 36/2004 - non-applicability of service tax to cross-border technical/know-how services prior to 1-1-2005 - precedential effect of Larger Bench decisionLiability of recipient for service tax on services received from a non-resident supplier - non-applicability of service tax to cross-border technical/know-how services prior to 1-1-2005 - Whether the appellant was liable to pay service tax in respect of payments made to a foreign collaborator for technical know-how/assistance for the period 1-4-2002 to 31-3-2003. - HELD THAT: - The Tribunal applied the Larger Bench decision in Hindustan Zinc Ltd. v. CCE, which held that services provided by a non-resident from outside India were specified as 'taxable service' only with effect from 1-1-2005 by Notification No. 36/2004, and therefore the recipient could not be held liable to pay service tax prior to 1-1-2005 despite earlier amendments. Relying on that precedent, the Tribunal concluded that the appellant was not liable to pay service tax for services received from the foreign collaborator during the specified period. The Tribunal expressly declined to decide other contentions raised by the appellant, disposing of the appeal on this short ground and setting aside the impugned order; consequential relief was granted and the Revenue's appeal against enhancement of penalty was rendered infructuous. [Paras 2, 17]The appellant is not liable to pay service tax for services received from the foreign collaborator for the period 1-4-2002 to 31-3-2003; the impugned order is set aside and the appeal is allowed with consequential relief.Final Conclusion: Appeal allowed on the short ground that service tax on services received from a non-resident supplier is chargeable only from 1-1-2005 under Notification No. 36/2004; the impugned order for the period 1-4-2002 to 31-3-2003 is set aside and consequential relief granted. 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.