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2016 (12) TMI 229 - CESTAT MUMBAIExemption from levy of service tax on import of services - interpretation of statute - reverse charge transaction - reimbursements made over to service providers - transaction in the nature of ‘commitment charges’ and ‘waiver fees’ - whether that exemption can lead to escapement from tax in the hands of the recipient of service in a ‘reverse charge’ transaction? - claim of exemption under immunity provisions in the Asian Development Bank Act, 1966 and International Finance Corporation (Status, Immunities and Privileges) Act, 1958 - Held that: - while analyzing section 66A of Finance Act, 1994, the fiction of taxable service is legislated and thereafter the recipient is legislated as tax payer. When the enactments that honour international agreements specifically immunize the operations of the service provider from taxability, a law contrary to that in the form of section 66A which legislates such operations into tax net will not prevail In arriving at this interpretation, we are guided by two important considerations both of which flow from the mandate to respect and honour international commitments; more particularly when they have force of law. We have already observed the mischief that would follow to the principle of national treatment if we were to accept the position taken by the adjudicating Commissioner. Our place in the comity of nations is determined by our respect for commitments made at the international negotiation tables. Compliance, as a signatory to international treaties, conventions and agreements, has been the subject of various disputes before the Supreme Court. In the initial years, a strict view with Article 253 as the centre-piece was the trend of judicial thinking. Thus the Hon’ble Supreme Court was not much convinced that the doctrine of ‘pacta sund servanda’ could override the constitutional prescription of legislating treaties into enactment for acquiring force of law. In the evolution of judicial interpretation, the obligation of the State in accordance with Article 51 has been held to render treaties and agreements as binding. In the situation of Agreements having been enacted to have force of law, there can be no doubt that the intent of the those Agreements must prevail over an interpretation that begins and end within the framework of a taxing statute We do not concur with the need for a separate exemption as held in the impugned order. The existing laws enacted by the sovereign legislature of the Union suffice for the purpose of giving effect to Agreements. And to attain that end, the taxing statute, if it offers the scope, must be so interpreted. Confirmation of demands of tax, interest thereon and imposition of penalties are without authority of law. Impugned order is set aside with consequential relief.
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