The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, has set aside a service tax demand of ₹5.23 lakh on management consultancy services received from abroad, holding that the issue was covered by settled precedent excluding reverse charge liability for services rendered before April 18, 2006.
The bench of R. Muralidhar (Judicial Member) followed the Bombay High Court’s decision in Indian National Shipowners’ Association v. Union of India, which was upheld by the Supreme Court, as well as an earlier decision of the Kolkata Bench involving the same company.
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The dispute arose from a show cause notice alleging that the company had failed to pay service tax under the reverse charge mechanism on management consultancy services received from outside India.
The notice proposed a demand of ₹5,23,144 in connection with the consultancy invoice. Following adjudication, the lower authorities confirmed the demand.
The company challenged the appellate order dated November 30, 2018, before CESTAT.
The company submitted that the services in question had been rendered in March 2006, before the statutory provision governing the disputed reverse charge liability became effective. The issue had already been settled by the Bombay High Court in Indian National Shipowners’ Association v. Union of India.
The company relied on that judgment for the proposition that service tax under the reverse charge mechanism was not payable for the period before April 18, 2006, when Section 66A became effective. It also pointed out that the Supreme Court had upheld the decision.
The company further referred to CESTAT’s own earlier ruling in its favour. Through Final Order Nos. 76879–76880/2018 dated October 30, 2018, the Kolkata Bench had held that no service tax was payable for services rendered before April 18, 2006.
On that basis, the company sought the setting aside of the demand.
After examining the factual details, the Tribunal agreed that the dispute was squarely covered by the cited decisions.
Judicial Member R. Muralidhar relied both on the ruling in Indian National Shipowners’ Association and on the Kolkata Bench’s earlier order involving the same appellant.
The Tribunal consequently set aside the impugned order and allowed the appeal. It also held that the company would be eligible for consequential relief, if any, as permitted by law.
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