TMI Blog2023 (6) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of payment towards value of service, no Service Tax shall be payable for the part or whole of the value of services which is attributable to services provided during the period when such services were not taxable. As such, the impugned order holding that the taxable event is not the provision of the service but the date on which the value of taxable service is paid, is not legally maintainable. Hence, the demand of tax confirmed in this regard is not sustainable. The appellant was issued with a Show Cause Notice C.No.IV/16/172/2003-STC dated 14.10.2003 for the period from 1997 to 2001 demanding appropriate Service Tax on Royalty paid which was dropped vide Order-in-Appeal No. 109/2004 dated 08.09.2004, indicating that the Department was well aware of the activities of the appellant such as payment of Royalties to foreign collaborators under consulting engineer service. The demand of Service Tax on the appellant for the normal period is confirmed - penalties imposed are also set aside - appeal allowed in part. - Service Tax Appeal No. 684 of 2012 - FINAL ORDER NO. 40495 / 2023 - Dated:- 28-6-2023 - HON BLE MR. P. DINESHA, MEMBER ( JUDICIAL ) And HON BLE MR. VASA SES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting engineers services in terms of Section 73 of the Finance Act, 1994. The Show Cause Notice also contained various other proposals like demanding appropriate interest and penalties under various sections of the Finance Act, 1994. 2.3 The appellant appears to have filed a very detailed reply to the above Show Cause Notice denying any liability to the Service Tax as proposed to be demanded. During adjudication, after considering the reply filed by the appellant, it appears that the adjudicating authority had passed the Order-in-Original dated 31.05.2004, which thereafter came to be set aside by the Commissioner of Central Excise (Appeals), Chennai vide Order-in-Appeal No. 109/2004 (M-III) (ST) dated 08.09.2004. It is evident from the pleadings of both parties that no appeal was filed against the said Order-in-Appeal. 3.1 Show Cause Notice dated 21.04.2011 came to be issued demanding Service Tax against various categories of services received from abroad during the period from 1st April 2004 to 31st March 2008 when SLH BC was clearly in existence, but however, the said Show Cause Notice was issued to Mrs. Godrej Sara Lee Limited by invoking the extended period of limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g been rendered prior to the introduction of levy, mere fact that payments for the same were made on staggered basis over a period of time could not be a ground for levying of tax by referring to the date on which the payments were made. 5.4 Without prejudice to the above, learned Advocate submitted that the demands raised and confirmed in the impugned order are not sustainable as being time-barred. He would submit that the earlier Show Cause Notice dated 14.10.2003 for the period from 1997 to 2001 had culminated in the Order-in-Original dated 31.05.2004 whereby the demands proposed came to confirmed, the appeal against which, filed by the appellant, was allowed vide Order-in-Appeal No. 109/2004 (M-III) dated 08.09.2004, to buttress that the Department was very much aware of the payment of Royalties to the foreign company under consulting engineers service. The demand proposed thus in the Show Cause Notice having been set aside, as submitted hereinabove, the appellant believed in good faith that there was no liability to Service Tax on its part on the very same issue and therefore, there was no scope whatsoever to allege suppression of any facts, much less, with an intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant s submission that the demand of Service Tax prior to 18.04.2006 is not sustainable as the charging Section 66A of the Finance Act, 1994 for levy of Service Tax on the services provided to the foreign service provider on reverse charge basis was enacted only with effect from 18.04.2006. In view of the ratio laid down in the case of M/s. Indian National Shipowners Association v. Union of India [2009 (13) S.T.R. 235 (Bom.)], which has been upheld by the Hon ble Supreme Court as reported in 2010 (17) S.T.R. J57 (S.C.), the appellant cannot be fastened with Service Tax liability for the Royalty payments made under consulting engineer service prior to 18.04.2006. The relevant finding of the Hon ble Court is extracted below: - 20. . It appears that it is first time when the Act was amended and Section 66A was inserted by Finance Act, 2006 w.e.f. 18-4-2006, the Respondents got legal authority to levy service tax on the recipients of the taxable service. Now, because of the enactment of Section 66A, a person who is resident in India or business in India becomes liable to be levied service tax when he receives service outside India from a person who is non-resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment towards value of service, no Service Tax shall be payable for the part or whole of the value of services which is attributable to services provided during the period when such services were not taxable. As such, the impugned order holding that the taxable event is not the provision of the service but the date on which the value of taxable service is paid, is not legally maintainable. Hence, the demand of tax confirmed in this regard is not sustainable. 10.3 In the case of M/s. Reliance Industries Ltd. v. Commissioner of C.Ex. S.T., LTU, Mumbai [2016 (44) S.T.R. 82 (Tri. Mumbai)], it has been held that the service itself having been rendered prior to the introduction of levy and payments were made on a staggered basis over a period of time cannot be a ground for levying Service Tax with reference to the date on which the payments were made. 11.1 We find that the appellant was issued with a Show Cause Notice C.No.IV/16/172/2003-STC dated 14.10.2003 for the period from 1997 to 2001 demanding appropriate Service Tax on Royalty paid which was dropped vide Order-in-Appeal No. 109/2004 dated 08.09.2004, indicating that the Department was well aware of the activities of the ..... 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