Foreign Services - Indian Taxes - Board finally accepts INSA
IN CBEC letter, F No.275/7/2010-CX8A, dated 30.06.2010, Board had communicated its view that service tax on a taxable service received in India, when provided by a non-resident/person located outside India, would be applicable on reverse charge basis with effect from 1.1.2005, and that the ratio of judgement in Indian National Shipowners Association (INSA) case - would not apply to such cases. Further, direction was issued to field formations to defend the levy of service tax on such services for the period on or after 1.1.2005, as post INSA judgment, it has been held by the High Courts/Tribunal in a large number of cases, applying ratio thereof, that service tax on such services is leviable only w.e.f. 18.4.2006.
However, the appeals filed by the department before the Supreme Court, for defending the levy of service tax on such services w.e.f. 1.1.2005, have been dismissed recently (subsequent to the issuance of the instruction dated 30.06.2010) in several cases. Further, Review Petition No. 1686 of 2011 filed in the case of Bhandari Hosiery has also been dismissed by the Supreme Court vide order dated 18.8.2011.
Board, now concedes that in view of the judgements of the Supreme Court, 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 with effect from 18.04.2006, i.e., the date of enactment of section 66A of the Finance Act, 1994.
The Board has at last accepted this position.
Accordingly, the instruction F No. -CX8A, dated 30.06.2010 stands rescinded.
Board wants appropriate action to be taken accordingly in the pending disputes. Hundreds of cases are pending in Tribunal on this issue. Board should also instruct the Commissioners to withdraw all those appeals.
It is a great gesture on the part of the Board to gracefully accept the judgements of the Apex Court and issue these instructions.
Please also see 13.07.2010
CBEC Instruction in F. No. 276/8/2009-CX8A., Dated: September 26, 2011