LAKSHMI MILLS CO. LTD. Vs. CCE

JUDGEMENT

(1.) IN this application the appellant M/s. Lakshmi Mills Co. Ltd., Kovilpatti, (LMCL for short) seek waiver of predeposit and stay of recovery of dues as per the impugned order. LMCL are engaged in the manufacture and export of cotton yarn. A commission agent based abroad canvassed export orders for them. The appellant paid an amount of Rs. 7,18,506/ - for such services received during October, 2004 to September, 2005. As the appellant had failed to remit the tax to the government on the services falling under the category of 'Business Auxiliary Services' received, proceedings were initiated against the appellants. On conclusion of the proceedings, the original authority confirmed demand of service tax of Rs. 71,850/ -, education cess of Rs. 1,437/ - and interest due on the service tax demanded. He also imposed a penalty of Rs. 73,287/ - on the appellants Under Section 75 of the Finance Act 1994. In the impugned order, the Commissioner has found that the order of the original authority is in accordance with law and upheld the same.

(2.) MOVING the application for waiver and stay, the Ld. Counsel for the appellants submits that the appellants have already paid the service tax of Rs. 73,287 and interest of Rs. 20,069/ -. He submits that the demand of service tax, interest and penalty are not sustainable in view of the decision of the Ahmedabad Bench of the Tribunal in Foster Wheeler Energy Ltd. v. CCE reported in 2007 (7) STR 443 (Tri. -Ahmd). In the said order, it was held that offshore services were liable to service tax only after insertion of Section 66 A in the Finance Act 1994 with effect from 18.04.06. The Tribunal had also observed that the Central Board of Excise and Customs in its Service Tax Circular No. 36/4/01 dated 8.10.01, had held that service tax provided beyond the territorial waters would not attract service tax. That circular was relevant till the enactment of Section 66A on 18.4.06. The Tribunal had accordingly set aside the service tax demand for offshore services received during the period prior to 18.4.06.

(3.) LD . SDR submits that the impugned order has been passed in accordance with law and supports the reasoning followed by the lower authority. He invites my attention particularly to Rule 2(d)(iv) of Service Tax Rules, as per which, person liable for paying service tax means, in relation to any taxable service provided by a person who is a non -resident or is from outside India, does not have any office in India, the person receiving taxable service in India.