CCE Vs. MOTHERSON SUMI SYSTEMS LTD.

JUDGEMENT

(1.) THIS appeal is filed by the Revenue against the order of Commissioner (Appeals).

(2.) THE facts in brief are that: M/s. Mother son Sumi Systems Ltd., Noida (hereinafter referred to as "MSSL") during the period 1999 -2000 to 2000 -2001 paid technical assistance fees/service charges for services received by them from M/s. Sumi Tomo Wiring Systems Ltd., Japan (hereinafter referred to as "STWSL" under the category of "Management Consultancy" and "Consulting Engineer". M/s. MSSL also paid Royalty/Service Charges for services received from M/s. STWSL, Japan under the category of "Consulting Engineer", on which, service charge was paid to the government either by M/s. MSSL or by M/s. STWSL, Japan. Therefore, show cause notice was issued to M/s. MSSL and M/s. STWSL for recovery of the service tax. The show cause notice was adjudicated by the Deputy Commissioner of Central Excise, Noida, who confirmed payment of Rs. 16,05,850 under the provisions of Section 73A of the Finance Act 1994 against M/s. MSSL. He also imposed a penalty on M/s. MSSL and demanded interest on the service tax short paid. The appeal filed by M/s. MSSL was allowed by the Commissioner (Appeals), Noida. Therefore, the Revenue filed the present appeal against the order of the Commissioner (Appeals).

(3.) IT was pleaded that prior to 11th August, 2002 service tax was payable by authorized representative of the foreign service provider and not by the service receiver. Only after the amendment of the Service Tax Rules from 16th August, 2002, the recipient of the services, became liable for payment of service tax, if the services are provided by foreign person. Since, in the present case the service was provided by the foreign person and such person has not appointed any authorized representative for payment of service tax, the recipient of the service cannot be held liable for service tax. Reliance was placed on the tribunal's decision in the case of (1) Bajaj Auto Ltd. v. CCE, Aurangabad , wherein it was held that non resident/person out side India providing service in India, tax cannot be recovered from service receiver in India as the same person cannot be both client and agent, and amendment to Rule 2 of Service Tax Rules 1994 by insertion of Clause (iv) for payment of tax by service receiver in India had only prospective effect; and (2) Moser Baer India Ltd. v. CCE, India Final Order No. 706/2005 -ST(PB) in Appeal No. ST/25/2005 A dated 1st July, 2005, wherein it was held that prior to amendment of Rule 6, the liability of service tax period prior to the amendment, no liability arises, since, appellant was not appointed as the authorized agent of the service provider.