2011 (8) TMI 878 - AT - Service Tax

Demand - Consulting Engineer - The Revenue has not explained how the services rendered by the Respondent who is situated abroad are covered under tax levied under Finance Act 1994 - Since the Respondent as a person situated outside India was not under obligation to take out registration or file any return the allegation regarding suppression is not maintainable against the Respondent and the appeal is liable to be rejected on this issue itself - Decided in favor of the assessee

Summary

Issues:
1. Whether the services provided by the respondent company to an Indian entity constitute Consulting Engineer Service, attracting service tax liability.
2. Whether the demand for service tax is time-barred due to the interpretation of law.
3. Whether the Finance Act, 1994, applies to services provided by a company established outside India.
4. Whether the respondent is liable for service tax under Section 70 of the Finance Act, 1994.

Issue 1: Consulting Engineer Service Tax Liability
The respondent, a company in France, provided services to an Indian entity. The Revenue contended that the services fell under Consulting Engineer Service, necessitating service tax payment. The Commissioner (Appeals) allowed the appeal, stating the services were intellectual property services under a technology transfer agreement, not Consulting Engineer services. The lack of evidence of willful suppression by the respondent led to the rejection of penalties. The Department argued that the agreement included consultation and training services, falling under Consulting Engineer Service. However, the Tribunal found no explanation of how services by a foreign entity were taxable under the Finance Act, 1994. As the respondent was not obligated to register or file returns in India, the suppression allegation was deemed invalid, resulting in the rejection of the appeal.

Issue 2: Time-Barred Demand
The Commissioner (Appeals) ruled the demand was time-barred due to the interpretation of law, as the Revenue failed to prove willful suppression. The Department invoked the extended period due to the respondent's lack of registration and return filing. However, the Tribunal found the extended period inapplicable as the respondent, situated outside India, was not required to comply with Section 70 obligations. Consequently, the appeal was rejected based on this ground alone, without delving into other issues.

Issue 3: Applicability of Finance Act, 1994
The respondent argued that being outside India and minimally operating in India, they were not liable for service tax under the Finance Act, 1994. They highlighted that the recipient of services, Gas Authority of India, had paid the tax. However, the lack of supporting evidence undermined this argument. The Tribunal concurred that the Act did not cover services provided by a foreign entity not subject to registration or return filing obligations in India, leading to the dismissal of the appeal.

In conclusion, the Appellate Tribunal rejected the Revenue's appeal, emphasizing that the respondent's foreign status exempted them from service tax liability under the Finance Act, 1994. The lack of evidence supporting the Revenue's claims of willful suppression or applicability of extended time barred the demand and penalties, resulting in the dismissal of the appeal solely on jurisdictional grounds.