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of <h1>Tribunal Allows Appeal, Service Tax Demands Not Sustainable Pre & Post 18.4.2006</h1> <h3>M/s. K.P.R. Cotton Mills Pvt. Ltd. Versus Commissioner of Central Excise, Coimbatore</h3> The Tribunal set aside the order, allowing the appeal with consequential relief, based on the precedents cited in the cases of Indian National Shipowners ... Reverse Charge Mechanism - Business Auxiliary Service - commission paid by the appellant to its overseas agents - demand of service tax for the period 9.7.2004 to 31.12.2006 - Held that: - the issue is decided in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION Versus UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service - the demand for the period prior to 18.4.2006 is not sustainable and therefore requires to be set aside. For the period post 18.4.2006, reliance placed in the case of Texyard International, Sree Angalamman Exports, Atlas Export Enterprises, M/s Kangaroo Impex Versus Commissioner Of Central Excise, Trichy [2015 (8) TMI 794 - CESTAT CHENNAI], where it was held that the demand of service tax under Business Auxiliary Service for services provided in relation to textile processors cannot be sustained. Appeal allowed - decided in favor of appellant. Issues:Levy of service tax on commission paid to foreign agents under reverse charge mechanism for the period prior to 18.4.2006 and post 18.4.2006.Analysis:For the period prior to 18.4.2006, the appellant, a manufacturer and exporter of textile articles, was issued a show cause notice demanding service tax on the commission paid to overseas agents under the category of Business Auxiliary Service. The original authority confirmed the demand, but the appellant argued that the issue had been settled by the judgment in the case of Indian National Shipowners Association Vs. Union of India, affirmed by the Supreme Court. The jurisdictional High Court also supported this view. Consequently, the Tribunal held that the demand for this period was not sustainable based on the precedents cited.Regarding the period post 18.4.2006, the appellant claimed eligibility for exemption under Notification No. 14/2004-ST dated 10.9.2004. The Tribunal referred to the decision in the case of Texyard International Vs. Commissioner, which stated that no service tax is leviable under Business Auxiliary Service in relation to textile processors. As the appellants fell within this category, the Tribunal found the demand for this period also not sustainable.In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any. The judgment in the case of Texyard International was crucial in determining the non-sustainability of the service tax demands for both the period prior to 18.4.2006 and post 18.4.2006.
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