Taxable service

CESTAT, BANGALORE BENCH

Molex (India) Ltd.

v.

Commissioner of Central Excise, Bangalore

DR. S.L. PEERAN, JUDICIAL MEMBER

AND T.K. JAYARAMAN, TECHNICAL MEMBER

MISC. ORDER NO. 569/2007

APPEAL NO. ST/87/2005

November 2, 2007

Section 65 of the Finance Act, 1994 - Taxable service - Period from March, 2003 to March, 2004 - Assessee was availing management services from a foreign company - Service tax was demanded service tax from assessee holding that by virtue of rule 2(d)(vi) of Service Tax Rules, 1994, assessee was liable to pay service tax with effect from 16-8-2002 - Assessee relying upon Notification No. 36/2004 dated 31-12-2004 which was effective only from 1-1-2005, contended that prior to 2005, it was not liable to pay service tax - Tribunal in Aditya Cement v. CCE [2007] 9 STT 1156 (New Delhi - CESTAT) held that service tax liability on recipient was only with effect from 1-1-2005 in view of Notification No. 36/2004 - However, Tribunal in Calvin Wooding Consulting Ltd. v. CCE [2007] 90 STT 334 (New Delhi - CESTAT) had taken a contrary view that with effect from 16-8-2002 liability to pay service tax for services received from a company abroad was on recipient - Whether in view of conflicting decisions of Tribunal, matter was to be referred to Larger Bench - Held, yes (Para 62)

Circulars and Notifications: Notification No. 36/2004 dated 31-12-2004

FACTS

The assessee was availing management services from a foreign company. The revenue demanded service tax from the assessee holding that by the virtue of rule 2(d)(vi) the assessee was liable to discharge the Service Tax liability, with effect from 16-8-2002. The assessee relying upon the Notification No. 36/2004 dated 31-12-2004 which was effective only from 1-1-2005 contended that during the relevant period it was not liable to pay service tax. The lower authority confirmed the demand. On appeal, the Commissioner (Appeals) confirmed the order of the lower authority.

On appeal:

HELD

In the case of Aditya Cement v. CCE, [2007] 9 STT 156 (New Delhi - CESTAT) the Tribunal had taken a decision that the service tax liability on recipient was only with effect from 1.1.2005 in view of Notification No. 36/2004 issued in terms of section 68(2). [Para 6]

However, the Tribunal in the case of Calvin Wooding Consulting Ltd. v. CCE [2007] 9 STT 334 (New Delhi - CESTAT) has taken a contrary view wherein it has been held that with effect from 16-8-2002 liability to pay service tax for services received from a company abroad was on recipient. [Para 6.1]

It was found that conflicting views had been expressed by the various benches who had dealt with this issue and in view of the conflicting decisions, the instant case was a fit case for referring the matter to the Larger Bench. Therefore, the question of leviability of service tax on the service recipient prior to 1-1-2005 has to be decided in view of the conflicting decisions of the Tribunals on the matter. Therefore, the matter was to be referred to the Larger Bench. [Para 6.2]