S.K.M. Egg. Products Exports Vs. Cce - Court Judgment

Excerpt:
.....the services during may 2005. the appellant's contention before the lower authorities that the service received from a person based abroad was not exigible to tax prior to 16.06.05 was rejected.2. the ld. counsel for the appellants submits that only on 16.06.05, the following explanation was inserted under clause 105 of section 65 of the finance act, 1994, which provided that the service received from a person resident abroad could be taxed. explanation. -- for the removal of doubts, it is hereby declared that where any service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than india and such service.....

Judgment:
1. This application has been filed by M/s. S.K.M.Egg Products Exports India Ltd., Cholankapalayam, seeking waiver of predeposit of Service Tax of Rs. 13,419/- and Education Cess of Rs. 268/- demanded from them.

They also seek waiver of predeposit of penalty of Rs. 3500/-imposed under Section 76 and Rs. 1000/- under Section 77 sustained in the impugned order. The appellants had availed service of testing and analysis of egg powder from an entity based in Belgium. The appellants had obtained the services during May 2005. The appellant's contention before the lower authorities that the service received from a person based abroad was not exigible to tax prior to 16.06.05 was rejected.

2. The Ld. Counsel for the appellants submits that only on 16.06.05, the following explanation was inserted under Clause 105 of Section 65 of the Finance Act, 1994, which provided that the service received from a person resident abroad could be taxed.

Explanation. -- For the removal of doubts, it is hereby declared that where any service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India and such service is received or to be received by a person who has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India, such service shall be deemed to be taxable service for the purposes of this clause.

3. The Counsel further submits that the vires of this provision has been challenged before the Hon'ble High Court of Madras pursuant to the notices received for services received during the period subsequent to 16.06.05. The appellants have produced the orders of the High Court staying further proceedings on the Show Cause Notices. In the circumstances, the appellants have made a prima facie case against the order demanding service tax, education cess and penalty from them in the impugned order. Accordingly there shall be waiver of predeposit and stay of recovery of the dues till final disposal of the appeal.