Custom, Excise & Service Tax Tribunal
South City Projects Kolkata Ltd vs Commissioner Of Service Tax Kol on 26 June, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Service Tax Appeal No. 84/2008
(Arising out of Order-in-Appeal No.06/ST/08 dated-31.01.2008 passed by
the Commissioner of Service Tax, Kolkata)
M/s. South City Projects (Kol.) Ltd.
Applicant (s)/Appellant (s)
Vs.
Commr. of Service Tax-II, Kolkata
Respondent (s)
Appearance:
Shri A.K. Agarwal, C.A. for the Appellant (s) Shri K. Choudhuri, Supdt. (A.R.) for the Respondent (s) CORAM:
Hon'ble Shri P.K.Choudhary, Member (Judicial) Hon'ble Shri C.L. Mahar, Member (Technical) Date of Hearing & Decision :-26.06.2018 ORDER NO. :F/O 76380/18 Per Shri C.L. Mahar The brief facts of the matter are that the appellant are engaged in providing service of Residential Complex Construction Service and for various projects they have been engaging several foreign agencies Service Tax Appeal No. 84/2008 for providing design consultancy, land escaping services etc. which fall under the category of Real Estate Agent Services. The appellant has made payment to such foreign service providers in foreign exchange. The relevant period of such activity for which the demand of service tax has been raised pertaining to the period 2002, 2003 and 2004.
2. It has been the contention of the Revenue that the provisions of sub-clause iv in Clause D and sub-rule (1) of Rule 2 of the Service Tax Rules, 1994 provide that if in relation to any taxable service provided by a person who has no business establishment and his normal place of residence or business is in a country other than in India and if such person does not have any office in India, the service recipient for such services who generally has business establishment in India, will have to pay Service Tax on Reverse Charge basis. A show cause notice on the basis of above was issued demanding service tax of Rs.9,81,575/- and penalties under Section 77 and 78 were also invoked. The matter came to be adjudicated vide order dated-08/3/2007 wherein allegations of the above mentioned show cause notice was confirmed. The appellant have gone before Commissioner (Appeal) against the Order-in-Original and the Ld. Commissioner (Appeal) was also pleased to ditto the Order-in-Original. Therefore, the appellants are before us against this order.
3. We have heard both the sides and perused the record of the appeal. In this matter, we find that the matter is no longer res integra as issue has already been finalised by Hon'ble Bombay High Court in their judgement in the case of Indian National Shipowners Association Vs. Union of India [2009 (13) S.T.R. 235 (Bom.)]. The above judgement has also been endorsed by Hon'ble Supreme Court in their judgement in the same case reported in [2010 (17) S.T.R. J57 (S.C.)]. It has been held by 2 Service Tax Appeal No. 84/2008 Hon'ble High Court that the service recipient in India is liable to Service Tax for service received from abroad only from 18/04/2006 after enactment of Section 66A of Finance Act, 1994. The relevant extract of the above judgement of Bombay High Court is reproduced below:
"........20. It appears that a similar provision in the rules was made applicable by the Government in relation to the Clearing Agents by making customers of the Clearing Agent liable for levy of the service tax. That question has been decided by the Supreme Court by its judgment in the case of Laghu Udyog Bharati (supra) and the Supreme Court has clearly laid down that the imposition of the service tax is on the persons rendering the services and by making a provision in the Rules, levy of tax cannot be shifted to the recipients of the services and the Rule framed which brought about this situation has been declared by the Supreme Court to be invalid. The law laid down by the Supreme Court in its judgment in Laghu Udyog (supra) is squarely applicable to Rule 2(1)(d)(iv), which is relied on in this case. 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 or is from outside India. Before enactment of Section 66A it is apparent that there was no authority vested by law in the Respondents to levy service tax on a person who is resident in India, but who receives services outside India. In that case till Section 66A was enacted a person liable was the one who rendered the services. In other words, it is only after enactment of Section 66A that taxable services received from abroad by a person belonging to India are taxed in the hands of the Indian residents. In such cases, the Indian recipient of the taxable services is deemed to be a service provider. Before enactment of Section 66A, there was no such provision in the Act and therefore, the Respondents had no authority to levy service tax on the members of the Petitioners- association.
21. In the result, therefore, the petition succeeds and is allowed. Respondents are restrained from levying service tax from the members of the Petitioners-association for the period from 1-3-2002 till 17-4-2006, in relation to the services received by the 3 Service Tax Appeal No. 84/2008 vessels and ships of the members of the Petitioners-association outside India, from persons who are non-residents of India and are from outside India."
Thus in view of above, services received by the appellant from the service provider who are not based in India are not liable to service tax prior to 18/04/2006 and as since the entire period of demand is prior to the period of 18.4.2006, we hold that the order-in-appeal is devoid of any merit and same is set aside.
4. In view of above, we allow the appeal.
(Operative part of the order already Pronounced in the court) Sd/- 28/06/18 Sd/- 28/06/18 ( P.K.CHOUDHARY) (C.L. MAHAR) Member (Judicial) Member (Technical) k.b/-
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