By TIOL News Service

NEW DELHI, FEB 11, 2017: THE appellant is registered with Service Tax Department.

Online information and data base access service provided by any Indian news agency was exempted from payment of service tax in terms of Notification No. 13/2010-ST dated 27.02.2010 subject to fulfillment of the conditions mentioned therein.

The appellant claimed the exemption as a service provider and the same was allowed by the Department. However, in respect of the same exemption claimed by the appellant as a service receiver but on which they were required to pay tax on reverse charge basis, the benefit was denied.

Against the confirmation of the service tax demand of Rs.1,20,788/-, the appellant is before the CESTAT.

It is submitted that the appellant was liable to pay service tax under section 66A of the FA, 1994 and accordingly, discharged its liability; that where the liability has been fixed on the service receiver for payment of tax, it has to be construed that the recipient had himself provided the service and accordingly, all the provisions of the Chapter V shall apply to such service recipient. Thus, the Notification dated 27.02.2010 providing for the exemption should also be available to the appellant as the recipient of service.

The AR submitted that the provisions of Section 66(2) are clear to the effect regarding the person liable to pay service tax; that the deeming fiction in terms of Section 66A is only for charging and collecting service tax from such recipient and the exemption Notifications having impact on rate of duty with attendant conditions are to be read independently, as there is no link made statutorily between the two.

The Bench observed -

++ A plain reading of Section 66A brings out the legal obligation of the recipient of service in certain situations. The said Section stipulates that taxable service shall be treated as if provided by the recipient of service in India and accordingly, all the provisions of Chapter V shall apply. Tax liability is put on the appellant on such legal fiction.

++ It is not legally tenable to hold that such legal fiction will have limited application only for payment of service tax and not with reference to any concession available to such service tax. No such implication can be read from the provisions of Section 66A.

++ We also note that the conditions mentioned in the Notification 13/2010 have been fulfilled and there is no dispute on that score.

++ When the provider of service is put to liability to discharge service tax as per provisions of Section 66A all the provisions of Chapter V shall have full force for charge and collection of service tax. The exemption now claimed is part and parcel of the provisions of service tax as the Notification has been issued under the powers vested under Section 93 of the said Act.

++ Considering the legal position as stipulated clearly in Section 66A, the legal fiction cannot be restricted only to collection of tax without applying any concession of the notification applicable thereto when the conditions of the said Notifications are fulfilled by the recipient of such service.

Holding that the finding in the impugned order is not sustainable, the same was set aside and the appeal was allowed.

(See 2017-TIOL-311-CESTAT-DEL)