2017 (5) TMI 1708 - AT - Service Tax

Demand of service tax - export of services - import of services - other services rendered within India - reverse charge mechanism - Circular dated 24.02.2009 - HELD THAT - It is an admitted fact on record that the appellant had received the services from the Overseas Service Provider prior to 18.04.2006. Since Section 66 A was inserted by Finance Act 2006 w.e.f. 1.5.2006 we are of the view that the services provided prior to 18.04.2006 will not be leviable to service tax under reverse charge mechanism. The Hon ble Bombay High Court in the case of Indian National Shipowners Association Vs. Union of India 2008 (12) TMI 41 - BOMBAY HIGH COURT has held that the recipient of taxable service is liable to pay service tax only w.e.f. 18.04.2006. Further the CBEC vide Circular dated 26.09.2011 has also endorsed such view - Thus the Commissioner should examine the judgement of the Honb ble Bombay High Court and the circular of CBEC and accordingly decide the issue whether the appellant should be eligible for the benefit or not. Export of service - HELD THAT - The appellant has provided scientific and technical consultancy service for the benefit of overseas service receivers. The circular dated 24.02.2009 issued by CBEC has clarified that such type of service falls under the category III service and as per Rule 3(1)(iii) of the Export Service Rules no service tax shall be leviable on such service. However the adjudicating authority has not discussed this aspect in the impugned order - the adjudicating authority is required to examine the case of the appellant as to whether it is governed under the Export of Service Rules as per the decision of the Tribunal and the Circular of CBEC referred supra for a proper finding on the issue. Other services provided by the appellant within the country - HELD THAT - The adjudicating authority should verify the payment particulars made by the appellant. Any amount against the liability confirmed if not paid the same should be recovered since the appellant has not contested the liability confirmed in the adjudication order. The matter is remanded back to the adjudicating authority for de novo adjudication - appeal allowed by way of remand.

Summary

Issues:
1. Service tax demand related to export of services, import of services, and other services within India.
2. Liability for service tax on services imported prior to 18.04.2006.
3. Tax liability on export of services provided to overseas service receivers.
4. Examination of services provided within the country and verification of payment particulars.

Analysis:
1. The appeal challenged an order confirming a service tax demand against the appellant for services related to export, import, and other services within India. The appellant contended that certain imported services prior to 18.04.2006 were not liable for service tax under reverse charge mechanism due to the absence of Section 66A before 15.04.2006. Regarding export of services, the appellant argued that no service tax was due as the services benefited recipients outside India, citing circulars to support their position. The appellant did not contest the service tax liability for other services provided within the country.

2. The Tribunal noted that services received by the appellant before 18.04.2006 were not subject to service tax under reverse charge mechanism as per the Finance Act, 2006. Referring to a Bombay High Court judgment and a CBEC circular, the Tribunal directed the Commissioner to assess whether the appellant qualified for exemption based on the timing of service provision.

3. Concerning the export of services, the Tribunal highlighted that the appellant provided services benefiting overseas service receivers, which, as per a CBEC circular, fell under a category exempt from service tax. Citing relevant case law and circulars, the Tribunal emphasized the need for the adjudicating authority to evaluate if the appellant's services met the criteria for exemption under the Export of Service Rules.

4. The Tribunal instructed the adjudicating authority to review the appellant's payment details for services provided within the country. Any outstanding amounts from confirmed liabilities were to be collected, as the appellant did not dispute these obligations. Ultimately, the impugned order was set aside, and the matter was remanded for a fresh adjudication based on the observations and directions provided by the Tribunal.