Imported service tax liability cannot be imposed on recipients for periods before Section 66A was inserted

Recipient liability for service tax on services received from abroad could not be fastened for any period before 18.04.2006, when Section 66A was inserted. The text notes that offshore services were treated as taxable from 01.01.2005 under the notification-based regime, but the demand in issue related to a period preceding 18.04.2006 and was therefore not sustainable. The appeal accordingly failed.

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Issues: Whether service tax could be demanded from the recipient in India for services received from abroad for the period prior to 18.04.2006, before insertion of Section 66A of the Finance Act, 1994.

Analysis: Liability of the recipient for services provided by a non-resident from outside India was considered in light of the statutory scheme then in force and the later insertion of Section 66A. The controlling view applied was that offshore services became taxable only from 01.01.2005 in respect of the specific notification-based regime and, in any event, recipient liability for import of services could not be fastened for periods prior to 18.04.2006, when Section 66A was inserted. The demand related to a period preceding that date.

Conclusion: The demand was not sustainable for the period prior to 18.04.2006 and the appeal failed.

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