Service Tax is not leviable on Taxable service received in India from Non-Residents: Supreme Court [Read Order]

In a significant case, the Supreme Court held that Service Tax is not leviable on Taxable services received in India from non-residents.

The department challenged the judgment and orderpassedby the Tribunal dismissingthe appealspreferred by the Revenue and confirming the order passed by the Commissioner not imposing the penalty on the service tax liability over the assessee,M/s. Sojitz Corporation.

The Commissioner did not impose/levy the penalty leviable under Sections 75-A and 78 of the Finance Act, 1994, against which the Revenue preferred the appeals before the Tribunal and the Tribunal has dismissed the appeals preferred by the Revenue which has given rise to Civil Appeal Nos. 3680-3681 of 2012.

The service tax on a taxable service received in India, when provided by a non-resident/person located outside India would be applicable on a reverse charge basis w.e.f. 01.01.2005 and the service tax on such services is leviable only w.e.f. 18.04.2006.  Therefore, for any services received in India, when provided by a non-resident/ person located outside India before 18.04.2006, there shall not be any service tax liability under the Finance Act, 1994.

A bench consisting of Justice M R Shah and Justice Krishna Murari observed that the service tax liability on any taxable service provided by a non-resident or a person located outside India, to a recipient in India, would arise w.e.f 18-4-2006, i.e., the date of enactment of Section 66A of the Finance Act, 1994.

It was further observed that the taxable service received by therespondent/Assessee received in India, when provided by a non-resident/person located outside India was for the period between November 1999 and March 2002, i.e., before 18.04.2006.

 Once there is no service tax liability by the respondent/Assessee for the services received during theperiod between November 1999 and March 2022, there is no question of levy of any penalty. While allowing the appeals the court observed that the Tribunal has rightly held that the Assessee is not liable to pay any penalty.

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