(M.R. Shah and Krishna Murari, JJ.)
Civil Appeal No. 4814 of 2009, decided on September 13, 2022
C.S.T. Delhi ____________________________________ Appellant;
v.
Sojitz Corporation ______________________________ Respondent.
With
Civil Appeal Nos. 3680-3681 of 2012
Civil Appeal No. 4814 of 2009 and Civil Appeal Nos. 3680-3681 of 2012
The Order of the court was delivered by
Order
1. As all the three appeals are with respect to the same Assessee and with respect to the same period but with respect to the service tax liability and the penalty on such service tax liability, all the three appeals are decided and disposed of together by this common judgment and order.
CIVIL APPEAL NO. 4814 OF 2009
2. The present appeal arises out of the impugned judgment and order dated 21.10.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal (for short, ‘the Tribunal’) passed in Service Tax Appeal No. 672/2007 by which the learned Tribunal has allowed the said appeal preferred by the respondent/Assessee and has set aside the levy of service tax.
CIVIL APPEAL NOs. 3680-3681 OF 2012
3. These appeals are preferred against the judgment and order passed by the learned Tribunal dismissing the appeals preferred by the Revenue and confirming the order passed by the Commissioner not imposing the penalty on the service tax liability, which is the subject matter of Civil Appeal No. 4841/2009. It is to be noted that the Commissioner did not impose/levy the penalty leviable under Sections 75-A and 78 of the Finance Act, 1994, against which the Revenue preferred the appeals before the Tribunal and the Tribunal has dismissed the appeals preferred by the Revenue which has given rise to Civil Appeal Nos. 3680-3681 of 2012.
4. The issue involved in the present appeals is in a very narrow compass. It is not in dispute that the service tax was sought to be levied for the transaction which has taken place outside India for the period between November, 1999 and March, 2002. The show cause notice was issued on 20.04.2005. It is not in dispute that the service tax on a taxable service received in India, when provided by non-resident/person located outside India would be applicable on reverse charge basis w.e.f. 01.01.2005 and the service tax on such services is leviable only w.e.f. 18.04.2006. Therefore, for any services received in India, when provided by non-resident/person located outside India prior to 18.04.2006, there shall not be any service tax liability under the Finance Act, 1994. Even the Central Board of Excise and Customs (CBEC) has issued Circular dated 26.09.2011 to the aforesaid effect, which reads as under –
“Circular: 276/8/2009-CX. 8A dated 26-Sep-2011
Taxable Services – Service tax by non – resident
to a recipient in India
Instruction F. No. 276/8/2009-CX.
8A, Dated 26-9-2011
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject: Applicability of Service tax on taxable services provided by a non-resident or a person located outside India to a recipient in India – Regarding.
Kind attention is invited to instruction F. No. 275/7/2010-CX8A, dated 30-6-2010, wherein the Board had communicated its view that services tax on a taxable service received in India, when provided by a non-resident/person located outside India, would be applicable on reverse charge basis with effect from 1-1-2005, and that the ratio of judgment in Indian National Shipowners Association (INSA) case [2009 (13) S.T.R. 235 (Bom.)] would not apply to such cases. Further, direction was issued to field formations to defend the levy of service tax on such services for the period on or after 1-1-2005, as post INSA judgment, it has been held by the the High Courts/Tribunal in a large number of cases, applying ratio thereof, that service tax on such services is leviable only w.e.f. 18-4-2006. However, the appeals filed by the department before the Hon’ble Supreme Court, for defending the levy of service tax on such services w.e.f. 1-1-2005, have been dismissed recently (subsequent to the issuance of said instruction dated 30-6-2010) in the following cases.
(i) SLP (C) No. 29539 of 2010 in CCE v. Bhandari Hosiery Exports Ltd. [2010 (20) S.T.R. (J99) (S.C.)]
(ii) SLP (C) No. 18160 of 2010 in CST v. Unitech Ltd.
(iii) SLP (C) No. 34208/09 of 2010 in UOI v. S.R. Batliboi & Co.
(iv) SLP (C) No. 328/332 of 2011 in UOI v. Ernst & Young.
(v) SLP (C) No. 25687-25688/2011 in CCE v. Needle Industries.
(vi) SLP (C) No. 25689-25690/2011 in UOI v. SKM Engg. Products.
Further, Review Petition NO. 1686 of 2011 filed in the case of Bhandari Hosiery has also been dismissed by the Hon’ble Supreme Court vide order dated 18-8-2011.
2. In view of the aforementioned judgments of the Hon’ble Supreme Court, the service tax liability on any taxable service provided by a non-resident or a person located outside India, to a recipient in India, would arise w.e.f 18-4-2006, i.e., the date of enactment of Section 66A of the Finance Act, 1994. The Board has accepted this position. Accordingly, the instruction F. No. 275/7/2010-CX8A, dated 30-6-2010 stands rescinded.
3. Appropriate action may please be taken accordingly in the pending disputes.”
5. In view of the above and as observed hereinabove, in the present case, the taxable service received by the respondent/Assessee received in India, when provided by non-resident/person located outside India was for the period between November, 1999 and March, 2002, i.e., prior to 18.04.2006, the Tribunal has rightly set aside the the levy of service tax on the aforesaid. Once there is no service tax liability by the respondent/Assessee for the services received during the period between November, 1999 and March, 2022, there is no question of levy of any penalty. Therefore, the Tribunal has rightly held that the Assessee is not liable to pay any penalty, as sought to be levied by the Department.
6. In view of the above and for the reasons stated hereinabove, all the three Appeals fail and the same deserve to be dismissed and are accordingly dismissed. No costs.
SUPREME COURT OF INDIA
RECORD OF PROCEEDINGS
Civil Appeal No. 4814/2009
C.S.T. Delhi.….Appellant(s)
v.
M/s. Sojitz Corporation.….Respondent(s)
With
C.A. Nos. 3680-3681/2012 (XVII-A)
C.A. No. 11400-11401/2018 (XVII-A)
(IA No. 164624/2018-CONDONATION OF DELAY IN FILING and IA No. 164625/2018-EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT and IA No. 165113/2018-STAY APPLICATION)
Date : 13-09-2022 This appeal was called on for hearing today.
(Before M.R. Shah and Krishna Murari, JJ.)
UPON hearing the counsel the Court made the following
ORDER
Civil Appeal Nos. 4814/2009 and 3680-3681/2012
7. The appeals are dismissed in terms of the signed order.
8. Pending application(s) shall stand disposed of.
C.A. Nos. 11400-11401/2018
9. Heard in part.
10. Put up on 14.09.2022 as part heard.
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