2009 (5) TMI 372 - AT - Service Tax

Appellate Tribunal rules for appellant in service tax appeal on overseas commission payments

The Appellate Tribunal CESTAT, Bangalore ruled in favor of the appellant in an appeal against the CCE (Appeals), Hyderabad-I concerning service tax on ... Reverse charge mechanism - services rendered outside India - section 66A of the Finance Act, 1994 for services rendered outside India - service tax liability of recipient under reverse chargeReverse charge mechanism - services rendered outside India - section 66A of the Finance Act, 1994 for services rendered outside India - service tax liability of recipient under reverse charge - Whether the appellants were liable to discharge service tax under the reverse charge mechanism for commissions paid to overseas agents for the period 1-1-2005 to 30-11-2005 - HELD THAT: - Revenue sought to impose service tax on commissions paid to overseas commission agents on the basis of reverse charge. The Tribunal applied the legal position that the reverse charge mechanism for services rendered outside India was introduced only from 18-4-2006 by insertion of section 66A of the Finance Act, 1994, and therefore could not be invoked for the earlier period in dispute. The Tribunal also recorded that the matter was squarely covered by earlier decisions relied upon by the appellant, including the decision of the High Court of Bombay and CESTAT/High Court decisions cited in the order, which support the view that service tax under reverse charge was not leviable for services rendered outside India prior to the statutory insertion effective from 18-4-2006. [Paras 2, 3]The appellants were not liable to discharge service tax under the reverse charge mechanism for commissions paid to overseas agents for the period 1-1-2005 to 30-11-2005; appeal allowed with consequential relief.Final Conclusion: The appeal was allowed: service tax under the reverse charge mechanism could not be imposed for commissions paid to overseas agents in the period 1-1-2005 to 30-11-2005, the reverse charge provision having been introduced only from 18-4-2006; consequential relief granted. The Appellate Tribunal CESTAT, Bangalore allowed the appeal against the CCE (Appeals), Hyderabad-I regarding service tax on payments to overseas commission agents. The Tribunal ruled in favor of the appellant based on previous decisions and the introduction date of the reverse charge mechanism.