Service tax on overseas commission payments was unsustainable for the pre-section 66A period under reverse charge.

Service tax on commission paid to overseas commission agents was held not leviable for the period before section 66A of the Finance Act, 1994 came into force. The dispute concerned services rendered outside India during 1-1-2005 to 30-11-2005, and the reverse charge mechanism for foreign services applied only from 18-4-2006. Relying on existing judicial decisions, the tribunal treated the pre-section 66A levy as unsustainable and accepted the assessee's position.

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Issues: Whether service tax was leviable on commission paid to overseas commission agents for the period prior to the introduction of section 66A of the Finance Act, 1994.

Analysis: The dispute related to payments made for services rendered outside India during the period 1-1-2005 to 30-11-2005. The reverse charge mechanism for such foreign services came into effect only from 18-4-2006 with section 66A of the Finance Act, 1994. The issue was treated as covered by existing judicial decisions holding that no service tax could be demanded for the pre-section 66A period on such commission payments.

Conclusion: The levy was not sustainable for the disputed period and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Service tax on services received from outside India could not be demanded under the reverse charge mechanism for a period prior to the commencement of section 66A of the Finance Act, 1994.

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