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Judgment
Both the Revenue as well as assessee are in appeal before us against the impugned order.Â
Brief facts of the case are that assessee is manufacture of cotton yarn and manmade staple fiber yarn and exporting the same. The assessee is
receiving services of agent located outside India for selling of their product and paying commission overseas thereon. During the period December,
2005 to October, 2006, Revenue issued a show cause notice to demand service tax on the commission paid to the service provider located outside
India under the category of Business Auxiliary services under reverse charge mechanism. Therefore, impugned proceedings were initiated and the
adjudicating authority confirmed the demand of Service Tax for whole of the period.
On appeal before the learned Commissioner (Appeals), the learned Commissioner relying on the decision of Indian National Shipowners
Association vs. Union of India [2009 (13) STR 235 (Bom)] which was affirmed by the Apex Court in [2010 (17) STR J 57 (SC)] gave the benefit of
commission paid prior to 18.4.2006 and for the period 18.4.06 to October 2006, he confirmed the demand of Service Tax.
Revenue is in appeal against the impugned order for dropping the demand for the period prior to 18.4.06 and assessee is in appeal against the
impugned order for confirming the demand for the period 18.4.06 to October, 2006 on the premises that services have been received by the appellant
prior to 18.4.06. Only the invoices have been raised by the service provider post 18.4.06. Therefore, services which have been received prior to
18.4.06, are not liable to pay service tax.
Heard the parties and considered the submissions.
As the issue is settled by the decision of Indian National Shipowner Association (supra) that in such a case, for the period prior to 18.4.06, the
assessee is not liable to pay service tax. In these circumstances, appeal filed by the Revenue deserves no merits. Hence, dismissed.
We further find that contention of the assessee is that for the period post 18.4.06 to October, 2006, the services have been received by the assessee
prior to 18.4.06 this fact has to be examined by the adjudicating authority. Therefore, we set aside the impugned order for the said period and remand
it back to the adjudicating authority with the direction that if services have been received by the assessee prior to 18.4.06, although the services
invoices have been received post 18.4.06, the assessee is not required to pay service tax on the commission paid to the service provider located
outside India. If the services has been received post 18.4.06, then the assessee is required to pay service tax along with interest and the penalty as per
law. The assessee is directed to produce the evidence in support of their contention within 7 days of the receipt of this order before adjudicating
authority, failing which the adjudicating authority shall be at liberty to recover the dues pending against the assessee.
Appeal is disposed of by way of remand.
(Dictated and pronounced in the open court)