Custom, Excise & Service Tax Tribunal
Cce, Ludhiana vs M/S. Bhandari Hosiery Exports Ltd on 19 February, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT II SERVICE TAX APPEAL NO. 642 OF 2007-SM WITH C.O./12 OF 2008 [Arising out of Order-in-Appeal No. 166/ST/Appl./Ldh/2007 dated 6.7.2007 passed by the Commissioner (Appeals), Central Excise, Jalandhar, at Chandigarh] For approval and signature: Honble Mr. S.S. Kang, Vice President 1. Whether Press Reporters may be allowed to see the order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Departmental authorities? CCE, Ludhiana Appellant Vs. M/s. Bhandari Hosiery Exports Ltd. Respondents
Appearance:
Shri Rajmal, SDR for the Revenue, Shri M.K. Dubey, Advocate for the respondent Coram:
Honble Mr. S.S. Kang, Vice President Date of Hearing: 19th February, 2008 FINAL ORDER NO._________________ dated __________ Per S.S. Kang:
Heard both sides.
2. Revenue filed this appeal against the impugned order whereby demand for extended period and penalties were set aside. The assesses M/s. Bhandari Hosiery Exports Ltd. also filed a cross objection challenging the demand confirmed in the impugned order.
3. Brief facts of the case are that assesses are engaged in the manufacture of hosiery goods. The assesses are also getting export orders. The assesses availed services of individual overseas commission agent under auxiliary services. Show cause notice was issued for demand of service tax for the period from 9.7.2004 to February, 2006 on the ground that the assesses being recipient of services of commission agent from the person who is residing outside India is liable to pay the service tax as recipient of commission agents services. The adjudicating authority confirmed the demand and imposed the penalty. The Commissioner (Appeals) on appeal, filed by the assesses set aside the demand which is beyond the normal period of limitation and also set aside the penalty. Contention of the assesses is that the period for demand is from 9.7.2004 to February, 2006 and Section 66A was introduced w.e.f. 18.4.2006 by Finance Act, 2006 vide which services rendered outside India are made liable to service tax. Contention is that prior to introduction of Section 66A of the Finance Act, services rendered outside were not taxable under the Finance Act. Contention is that since the demand in this case is for the period prior to introduction of Section 66A, hence, not sustainable. The assesses relied upon the decision of the Tribunal in the case of Foaster Wheeler Engg. Ltd., reported as 2007 (7) STR 443 for the proposition that services provided outside India are liable for service tax w.e.f. 18.4.2006 with introduction of Section 66A of the Finance Act.
4. Contention of the Revenue is that as per provisions of Rule 2(1)(d)(iv) during the relevant period the recipient of the service was liable to pay service tax. Therefore, service tax was rightly demanded from the present assesses. In response to the arguments raised by the Revenue the contention of the Counsel is that Rule 2(1)(d)(iv) was also amended w.e.f. 19.4.2006 to the effect that the person liable to pay service tax means, in relation to any taxable service provided or to be provided by any person from the country other than India and received by any person in India under Section 66A of the Act the recipient of such services.
5. In this case the demand is for the period from 9.2.2004 to February, 2006 prior to introduction of Section 66A of the Finance Act. The provisions of Section 66A of the Finance Act provides that the recipient of taxable service which is provided by a person who is residing outside India is liable to service tax. The corresponding Rule 2 the Service Tax Rules also amended thereafter. I find that prior to the introduction of Section 66A of the Finance Act there was no charging Section under the Act. Further, I find that the Tribunal in the case of Foaster Wheeler Engg. Ltd. (supra) held that the recipient of service which was provided outside India are made liable for service tax along with amendment in section 66A of Finance Act. In the present case as the period of demand is prior to the introduction of Section 66A of the Finance Act. Therefore, demand is not sustainable and, hence, set aside. Cross Objection filed by the assesses is allowed. Consequently, appeal filed by the Revenue will not survive as the same is for demand for the extended period. Hence, appeal filed by the Revenue is dismissed.
(Dictated & pronounced in the Open Court.) (S.S. KANG) VICE PRESIDENT Dated 19th February, 2008 RK