2018 (2) TMI 829 - AT - Service Tax

Appellant wins case on service tax for fees earned abroad. Precedent cited, extended period rule not applicable.

The Tribunal ruled in favor of the appellant, holding that the demand for service tax on professional fees received for services rendered abroad was not ... Consultancy Engineer Service - whether the appellant is liable to pay service tax for the amount received as professional fees for service rendered for a project outside India? - Held that: - the service was rendered by the appellant for a foreign project and the professional fees, though received in Indian currency, is not liable to levy of service tax being export of services - issue decided in favor of assessee in the case of INDIAN NATIONAL SHIPOWNERS' ASSOCIATION Versus UNION OF INDIA [2009 (3) TMI 29 - BOMBAY HIGH COURT]. Time limitation - Held that: - SCN dated 30.11.2006 has been issued invoking the extended period, which is not sustainable as the issue was interpretational and had travelled upto the Apex Court. Appeal allowed - decided in favor of appellant. Issues:Whether the appellant is liable to pay service tax on professional fees received for services rendered outside India.Analysis:The appellant, registered under consulting engineer service, provided services for foreign projects and received payments in Indian currency. The tax department contended that service tax was due on these payments. A show cause notice was issued for demanding service tax, interest, and penalties for a specific period. The original authority and Commissioner (Appeals) upheld the demand. The appellant argued that the fees, though received in Indian currency, were not taxable as they were for services rendered abroad. The appellant cited a judgment from the Hon'ble High Court of Bombay, upheld by the Hon'ble Apex Court, supporting their position. The appellant also claimed the demand was time-barred and that the extended period should not have been invoked due to the interpretational nature of the issue.The respondent reiterated the findings of the impugned order, maintaining the liability for service tax on the professional fees received by the appellant. The crucial issue before the Tribunal was whether the appellant was liable to pay service tax on the fees received for services provided outside India. The Tribunal noted that the Hon'ble High Court of Bombay had ruled in favor of the assessee in a similar case, a decision upheld by the Hon'ble Apex Court. The show cause notice invoking the extended period was deemed unsustainable by the Tribunal, considering the interpretational nature of the issue and its adjudication up to the Apex Court. Consequently, the Tribunal found the demand both on merits and limitation to be unsustainable. The impugned order was set aside, and the appeal was allowed with any consequential reliefs.In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand for service tax on professional fees received for services rendered abroad was not sustainable. The decision was based on the precedent set by the Hon'ble High Court of Bombay and the Hon'ble Apex Court, as well as the inapplicability of the extended period for invoking the demand.