Service tax on foreign agent commission for export orders was held unsustainable for the pre-18-04-2006 period.

Service tax was not payable on commission paid to foreign agents for procuring export orders during the relevant period, as the agents were located outside India and the applicable precedents held that, before 18-04-2006, the recipient was not liable to tax on such services received from abroad. The Tribunal followed that settled position and rejected the demand, with consequential penalties also not sustainable. The issue was therefore decided in favour of the assessee, and the service tax demand and penalties were set aside.

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Issues: Whether service tax was payable on commission paid to foreign agents for procuring export orders during the relevant period.

Analysis: The commission was paid to agents stationed outside India for procuring export orders. The applicable precedents held that, for the period prior to 18-04-2006, the recipient was not liable to pay service tax on such services received from abroad. The Tribunal followed that settled position and held that the demand and penalties could not be sustained.

Conclusion: The issue was decided in favour of the assessee, and the service tax demand with consequential penalties was set aside.

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