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CESTAT allowed the appeal, setting aside service tax demand on commission paid to foreign agents. The tribunal found services were rendered and received entirely outside India, making reverse charge mechanism under Rule 3(iii) of Taxation of Services Rules 2006 inapplicable since the rule requires services to be received in India. Following Orient Crafts Ltd precedent, no service tax can be levied on services rendered and received abroad. Revenue neutrality was established as service tax under Section 66A is CENVATABLE per Rule 3(1)(ixa) of CENVAT Credit Rules 2004. Extended limitation period was rejected citing Nirlon Limited, as department had knowledge since September 2006 and no suppression existed. Penalty was also set aside following Nizam Sugar Factory precedent against invoking extended period for subsequent notices.
CESTAT allowed the appeal, setting aside service tax demand on commission paid to foreign agents. The tribunal found services were rendered and received entirely outside India, making reverse charge mechanism under Rule 3(iii) of Taxation of Services Rules 2006 inapplicable since the rule requires services to be received in India. Following Orient Crafts Ltd precedent, no service tax can be levied on services rendered and received abroad. Revenue neutrality was established as service tax under Section 66A is CENVATABLE per Rule 3(1)(ixa) of CENVAT Credit Rules 2004. Extended limitation period was rejected citing Nirlon Limited, as department had knowledge since September 2006 and no suppression existed. Penalty was also set aside following Nizam Sugar Factory precedent against invoking extended period for subsequent notices.
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TaxTMI 
TaxTMI 
