Prospective taxation of foreign commission agent services barred service tax demand for periods before 18.04.2006.

Foreign commission agent services supplied by a provider with no office in India were held taxable only prospectively from 18.04.2006, when Section 66 of the Finance Act was inserted. The Tribunal applied its earlier view that recipient-based liability under Rule 2(1)(d)(iv) of the Service Tax Rules could not sustain a demand for the period before that date. The service tax demand for the prior period was therefore not sustainable, and the Revenue's appeals failed.

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Issues: Whether service tax was payable on foreign-based commission agent services availed prior to 18.04.2006.

Analysis: The Tribunal followed its earlier view that services provided by a person having no office in India became taxable only from 18.04.2006, when Section 66 of the Finance Act was inserted with effect from that date. On that basis, the recipient-based liability under Rule 2(1)(d)(iv) of the Service Tax Rules did not sustain the demand for the period prior to 18.04.2006.

Conclusion: The demand was not sustainable for the period in question and the Revenue's appeals failed.

Ratio Decidendi: Services rendered by a foreign service provider without an office in India were taxable only prospectively from 18.04.2006, and not for the prior period.

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