Imported service tax liability arose only after section 66A; pre-18-4-2006 demand for foreign consultancy services failed.

Service tax on scientific and technical consultancy received from a foreign firm could not be fastened on the Indian recipient for the period before 18-4-2006. The Tribunal followed the view that liability for services imported from abroad became enforceable only after insertion of section 66A, and therefore the pre-18-4-2006 demand was not sustainable. The order dropping that demand was left undisturbed, and the assessee succeeded on this issue.

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Issues: Whether service tax was leviable on the recipient in India for scientific and technical consultancy services received from a foreign firm for the period prior to 18-4-2006.

Analysis: The Commissioner (Appeals) had set aside the demand for the period before 18-4-2006 by following the view that service tax on services received from abroad became recoverable only after the insertion of section 66A with effect from 18-4-2006. The Tribunal agreed with that approach and noted that the recipient's liability could not be fastened for the earlier period.

Conclusion: The service tax demand for the period prior to 18-4-2006 was not sustainable and the assessee succeeded on the issue.

Final Conclusion: The appeal failed and the order dropping the pre-18-4-2006 demand was left undisturbed.

Ratio Decidendi: Service tax on services received in India from a foreign service provider could be levied on the recipient only from the date on which section 66A came into force.

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