PRICOL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) BOTH applications involve a similar issue and are hence heard together and disposed of by this common order.

(2.) IN Appeal No. S/29/09 demand of service tax of Rs. 10,35,624 has been confirmed together with interest against the applicants herein on the ground that they had paid commission to foreign agent and therefore the assessees were required to pay service tax as recipient of service as per rule 2(\)(d)(iv) of the Service Tax Rules, 1994 since 9 -7 -2004, and penalty amount equal to the tax has been imposed under Section 78, Rs. 1,000 under Section 77 and Rs. 200 per day under Section 76 of Chapter V of the Finance Act, 1994. The period in dispute is 9 -7 -2004 to 30 -4 -2006.

(3.) WE have heard both sides. The submission of the applicants that liability to service tax arises only with effect from 18 -4 -2006 as the service provider was situated outside India and the service was provided outside India is prima facie tenable in the light of the ratio of the judgment of the Hon'ble Mumbai High Court in Indian National Shipowners Association v. Union of India, [2009] 18 STT 212 and the decision of the Tribunal in Sharadha Terry Products Ltd. v. CCE : [2009] 21 STT 221 (Chennai - CESTAT) in which the judgment of the Hon'ble High Court of Rajasthan in Union of India v. Aditya Cement, [2008] 16 STT 59 upholding the Tribunal's order that service recipient in India was liable to service tax from 1 -1 -2005 was distinguished on the ground that Aditya Cement received services in India from its service provider. Following the ratio of the Bombay High Court's decision and Larger Bench decision of the Tribunal, we waive the requirement of pre -deposit of the amounts in question and stay recovery thereof pending the appeals.