Case Law Details
T.V.S. Motor Company Limited Vs Commissioner of Central Excise (CESTAT Chennai)
M/S. TVS Motor Company (Petitioner) had appealed against the Tribunal’s Final Order No. 652 of 2012 dated June 13, 2012. The Petitioner had appealed in the Supreme Court against the order dated June 13, 2012, and the Court vide order 2015 (37) S.T.R. J177 (S.C.) disposed of the matter. The Petitioner then again appealed in the Tribunal vide Service Tax Appeal No. 41077 of 2013 and considering the connection between the two appeals, the Tribunal had passed a common Final Order Nos. 42277-42278 / 2021.
In this case, the Petitioner received Technical Consultancy Services and Project Consultancy Services from various service providers who were not having their offices in India. As per Section 68(2) of the Finance Act, 1994, read with Rule 2(1) (D) (IV) of the Service Tax Rules, 1994, if the service provider does not have an office in India and his usual place of residence is in a country other than India, then the service receiver who has his business establishment in India is liable to pay Service Tax on behalf of the service provider. The Petitioner thus paid Service Tax on the value of service charges under reverse charge mechanism though they were the service recipients. While paying the Service Tax, they did not include the tax deducted at source (TDS) for determining the taxable value.
The Petitioner, to substantiate, the case raised three issues to the Tribunal. Firstly, whether the Petitioner is liable to pay Service Tax under reverse charge mechanism in terms of Section 66 of the Finance Act, 1994 read with 2(1) (D) (IV) of the Service Tax Rules, 1994, before its very introduction. Secondly, whether the Petitioner is liable to pay Service Tax on the TDS portion deducted while paying the consideration to the service provider.
The Honorable Tribunal took cognizance of both the issues and opined that, the first issue is settled by the decision of the Hon’ble High Court of Bombay in the case of Indian National Ship-owners Association v. Union of India [2008 (12) TMI 41 – BOMBAY HIGH COURT, dated March 23, 2009]. The Honorable High Court held that the liability to pay Service Tax under reverse charge mechanism would arise only after the introduction of Section 66A of the Finance Act with effect from April 18, 2006. The said decision was upheld by the Hon’ble Supreme Court in Union of India v. Indian National Ship-owners Association [2009 (12) TMI 850 – SC ORDER].
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