2008 (12) TMI 58 - AT - Service Tax

Respondent is a 100% EOU manufacturing cotton yarn paid commission to the foreign based company during 9.7.04-30.10.2005 - tax was demanded on the payment of the service rendered by the foreign based company who has no office in India as per Circular No. 36/4/01 dt. 8-10-2001 service provided beyond the territorial waters will not attract service tax - demand on services relating to identified offshore services cannot be subjected to service tax during the relevant period is acceptable

Summary

The Appellate Tribunal CESTAT, New Delhi, consisting of Mr. M. Veeraiyan, Member (Technical) and Mr. P.K. Das, Member (Judicial), heard an appeal filed by the Revenue against an order demanding service tax on commission paid by a 100% Export Oriented Unit to a foreign-based company for services rendered between 9.7.04-30.10.2005. The Adjudicating authority confirmed the tax demand and imposed a penalty, but the Commissioner (Appeals) set aside the order. The Tribunal reviewed the case and referenced a previous decision in the case of Foster Wheeler Energy Ltd., which stated that services provided beyond territorial waters were not subject to service tax before the amendment in service tax laws on 18-4-2006. As a result, the Tribunal rejected the Revenue's appeal, upholding the decision of the Commissioner (Appeals). The order was dictated and pronounced in open court.