COMMISSIONER OF SERVICE TAX Vs. ASHIMA LTD.

JUDGEMENT

(1.) THE facts of the case, in brief, are that the appellants are engaged in the manufacture of Cotton Fabrics and hold valid Central Excise registration. On scrutiny of the Balance -Sheets it was found by the department that they have entered into technology agreement with Cone mills Corporation of USA and paid Rs. 465.77 lakhs and Rs. 394.51 lakhs against Royalty and Technical Know -how fees respectively for the period 1999 to 2001 for the services received from overseas service provider. The technical services received from their collaborators fell under the definition of services provided by a Consulting Engineer as per Section 65(13) of the Finance Act, 1994. Therefore, the appellants were required to obtain service tax registration, to file service tax returns and to pay service tax @ 5% which came to Rs. 43.01 lakhs for the period 1999 to 2001. While the adjudicating authority confirmed the demand of Service Tax from the appellants in their capacity as receiver of service and imposed penalties under various sections of Finance Act, 1994 and on an appeal filed by the respondent, Commissioner (Appeals) has set aside the order of the original adjudicating authority and allowed the appeal. Revenue is in appeal against this order.

(2.) HEARD both sides. Shri Samir Chitkara, learned SDR submits that the appeal was filed in view of the fact that the facts are not similar to the case of Hindustan Zinc Ltd. In the case of Hindustan Zinc Ltd., the Larger Bench of the Tribunal has held that service receiver is not liable to pay Service Tax prior to 01.01.2005 if the service provider is situated abroad and has no office in India. This decision was reported in : 2008 (11) STR 338 (Tri -LB). He submits that Ashima Ltd. has been authorized by the service provider abroad to pay the duty on their above service. He also submits that the service providers were squarely covered in the definition of "Consulting Engineer". On the other hand, learned Advocate on behalf of the respondent submits that there is no dispute in the case that the service provider has no office in India and was situated outside and service was provided by the service provider from the outside the country even though the service was received in India. He also submits that no question as to whether the Service Tax was leviable or not, but the question is whether the respondents are liable to pay service tax. In view of the Larger Bench decision in Hindustan Zinc Ltd.'s case, an appeal against which filed by the Revenue has been dismissed by the Hon'ble Supreme Court is very clear and prior to 1.1.2005 there cannot be any liability against the respondent.

(3.) ACCORDINGLY , the stay petition as well as the appeal filed by the Revenue is rejected.