Section 65(55b), read with sections 73, 75 and 76, of the Finance Act, 1994 - Taxable services

Service Tax : Where service tax itself was not leviable, assessee cannot be asked to pay interest and penalty merely because he has paid non-payable service tax
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[2015] 55 taxmann.com 242 (Madras)
HIGH COURT OF MADRAS
Commissioner of Central Excise, Tirunelveli
v.
Sundaram Textiles Ltd.*
A. SELVAM AND G. CHOCKALINGAM, JJ.
C.M.A. (M.D.) NOS. 1129 & 1515 OF 2008†
M.P. (M.D) NO. 1 OF 2008
DECEMBER  16, 2013
Section 65(55b), read with sections 73, 75 and 76, of the Finance Act, 1994 - Taxable services - Intellectual Property services - Period 1999 to 15-8-2002 - Assessee received IPR/patent services from a Japanese company and, on department's insistence, paid service tax thereon - Department raised notice demanding interest and penalty as well - Assessee argued that since, prior to 16-8-2002, service itself was not taxable and there was no reverse charge provision, service tax was not payable and consequently, interest and penalty could not be demanded - HELD : Amendment to Service Tax Rules providing for liability of service recipient under reverse charge came into effect only on 16-8-2002; hence, during relevant period, there was no liability to pay service tax - Since assessee was not liable to pay Service Tax, he was also not liable to pay penalty as well as interest - Hence, demand was set aside [Paras 6 to 8] [In favour of assessee]