C.C.E., Chandigarh vs M/S. I.T.S. Corporation
- CitationAppeal No.ST/316/2009-CU[DB]
Ratio decidendi
The rule this decision rests on
Where a recipient of a service received from abroad is sought to be charged service tax under the reverse charge mechanism, that liability does not arise for any period before 18.04.2006, the date from which Section 66A of the Finance Act, 1994 took effect; the reverse charge liability therefore cannot be enforced for the period prior to that date, even where the service was of a kind otherwise falling within a taxable category. An earlier decision of the Tribunal that has not been stayed remains binding on the adjudicating authority, and the mere pendency of an appeal against it before the Supreme Court does not by itself displace its binding effect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes
Appeal No.ST/316/2009-CU[DB]
[Arising out of Order-in-Original No.18/ST/CHD/2009, dated 17.02.2009 passed by the C.C.E., Chandigarh-I]
C.C.E., Chandigarh Appellants
Vs.
M/s. I.T.S. Corporation Respondents
Appearance
Shri RK Misra, DR - for the appellants
Shri Sundeep Singh, Advocate - for the respondents
CORAM: Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. R.K. Singh, Member (Technical)
Final Order No.50801/2015, dated 12.03.2015
Per Mr. R.K. Singh :
Appeal has been filed by Revenue against Order-in-Original dated 17.02.2009 in terms of which the ld. Commissioner has dropped the demand of Rs.6,99,554/- for the period 2002-03 to 2005-06. The demand was raised under Consulting Engineer service on the ground that the respondents had paid an amount of Rs.74,02,921/- to M/s. Vinci Technologies, France for acquiring technical know-how, which the Show Cause Notice alleged fell in the category of Consulting Engineer service and therefore the respondents were required to pay service tax under reverse charge mechanism. The adjudicating authority came to a finding that transfer of know-how did not fall in the category of Consulting Engineer service and accordingly dropped the proceedings.
2. The essential ground of appeal taken by Revenue is that the judgement in the case of M/s. Shore to Shore MIS Pvt. Ltd. Vs. Commissioner [2007 (5) STR 109 (Tri. Chennai)] on which the adjudicating authority passed the impugned order has not attained finality as the appeal against the said order is pending in Supreme Court. This is not a valid ground as there is no stay against the said judgement and therefore the adjudicating authority has rightly held himself bound thereby. It is also seen that the period of demand in this case is upto 31.03.2006. The demand was raised in the Show Cause Notice on the ground that the respondents were liable to pay service tax under reverse charge mechanism in terms of Rule 2(1)(d)(iv) of Service Tax Rules, 1994. It is now well settled that liability to pay service tax by the recipient of service received from abroad commenced only w.e.f. 18.04.2006 with the introduction of Section 66A of the Finance Act, 1994. This has been so held in the case of Indian National Shipowners Assn Vs. Union of India [2009 (13) STR 235 (Bomb) / 2010 (17) STR 557 (SC)]. As the entire service was received from abroad prior to 18.04.2006, the liability to pay service tax by the respondents under reverse charge mechanism does not arise.
3. In view of the analysis above, the Revenues appeal is unsustainable and accordingly dismissed.
(Ashok Jindal)
Member (Judicial)
(R.K. Singh)
Member (Technical)
SSK
-2-
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