Custom, Excise & Service Tax Tribunal
C.S.T., New Delhi vs Orient Craft Limited on 13 December, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.KPuram, New Delhi-110066 Date of hearing/decision:13.12 .2011 Stay Petition No.2330 of 2011 in Service Tax Appeal No.1106 of 2011 Arising out of the order in appeal No.127/S.Tax/D-II/2011 dated 15.3.2011 passed by the Commissioner of Service Tax Appeals), Delhi II. For Approval and Signature: Honble Mrs.Archana Wadhwa, Judicial Member Honble Mr. Rakesh Kumar, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes C.S.T., New Delhi .. Appellant/applicant Vs. Orient Craft Limited .. Respondents
Appearance:
Shri K.P.Singh, A.R., for the Revenue None for the respondents Coram: Honble Mrs. Archana Wadhwa, Judicial Member Honble Mr. Rakesh Kumar Technical Member Oral Order No.____________________ Per Mrs. Archana Wadhwa:
Being aggrieved with the order passed by the Commissioner(Appeals), Revenue has filed the present appeal. We have heard Shri K.P. Singh, A.R. appearing for the Revenue and nobody appeared for the respondents.
2. The respondents are engaged in the manufacture and export of ready-made garments and textile made-ups to different countries. For getting the orders for export, they have appointed foreign companies to promote the sale of made in India products. The dispute in the present appeal relates to the issue as to whether the respondents were required to pay service tax in respect of the services of foreign commission agent received by them prior to 18.4.2006 when the provisions of Section 66A were introduced.
3. The Commissioner (Appeals) vide his impugned order has held that prior to 18.4.2006, the respondents liability to pay service tax on reverse charge mechanism cannot be upheld in view of law declared by the Honble Bombay High Court in the case of Indian National Shipowners Association vs. UOI reported in 2009 (13) STR 235 (Bom.).The said decision of the Bombay High Court has been confirmed by the Honble Supreme Court. He also referred to various other decisions of the Tribunal as also various High Courts wherein the Bombay High Court decision was followed. Reference also stands made by the appellate authority to Circular issued by the Board on 30.6.2010 vide F. No.275/7/2010-CX-8A. Relevant paragraphs are reproduced below:-
(i) in case of taxable service provided by a non-resident not having office/establishment in India and received in India, the taxable service liability arises w.e.f. 01.11.2005, on reverse charge basis on the recipient of service in India. Therefore, the overall facts and circumstances of each case needs to be taken into account to determine whether service is received in India or otherwise.
(ii) in case of taxable service received outside India by a person who is resident in India or has place of business/business establishment in India, the service tax liability arises w.e.f. 18.4.2006 as is in the case of Indian National Shipowners Association case, where services were received outside India for use in the ships and vessels located outside India.
Accordingly, the Commissioner (Appeals) has set aside the demand of service tax for the period prior to 18.4.2006 and has upheld the service tax for the period subsequent to 18.4.2006. He has also set aside the penalty on the ground that the respondents have deposited the demand of service tax for the period after 18.4.2006 voluntarily and inasmuch as there was confusion during the relevant period and the controversy about levy of tax under reverse charge was resolved only before decision of the Honble Supreme Court in the case of Indian National Shipowners Associations, there was reasonable cause on the part of the assessee not to pay the tax, he gave extended benefit of Section 80 to the respondents.
4. As against the above, the Revenue have in their memo. of appeal reiterated their stand that the respondents were liable to pay service tax of reverse charge mechanism in respect of service of foreign commission agent in terms of Rule 2(1)(d)(iv) of Service Tax Rules, 1994. However, we find no merits in the Revenues appeal inasmuch as the issue stands settled by the Honble Bombay High Court judgment confirmed by the Honble Supreme Court and accepted by the Board as reflected in the Circular. As such , after rejecting the stay petition, we proceed to decide the appeal itself. By applying the ratio of the Bombay Higy Court decision to the facts of the present case, we find no reason to interfere in the impugned order passed by the Commission4er (Appeals), The Revenues appeal is accordingly rejected. Stay petition as also the appeal get disposed of in above terms.
(Archana Wadhwa) Judicial Member (Rakesh Kumar) Technical Member scd/