February 07, 2026 : The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside and remanded a service tax demand of ₹14,81,790 raised against Lifelong India Private Limited, holding that service tax liability cannot be imposed merely on book provisions for commission payable to overseas agents when no service is received and no consideration is paid.
The bench, comprising Judicial Member Binu Tamta and Technical Member Hemambika R. Priya, was dealing with an appeal arising from a demand confirmed by the Commissioner (Appeals), Dehradun.
Lifelong India is engaged in manufacturing motor vehicle parts for both domestic sales and exports. For its North American market, the company had appointed overseas commission agents as non-exclusive sales representatives. Their scope of work included market research, sourcing enquiries, negotiating commercial terms, and providing after-sales support abroad.
According to the company, it was dissatisfied with the agents’ performance and discontinued the arrangement. While no commission payments were made, the company created provisions in its books as a precaution. The overseas agents raised two invoices dated 7 May 2012, but these invoices also remained unpaid.
Following a departmental audit, the tax authorities alleged non-payment of service tax on commission payable to overseas agents under the reverse charge mechanism. The demand, along with interest and penalty, was confirmed and upheld in appeal, leading Lifelong India to approach the Tribunal.
The Tribunal reiterated that under the service tax law, the taxable event is the provision of service for consideration in the taxable territory.
For the period prior to July 2012, the bench noted that services must be received in India to qualify as import of services under the reverse charge mechanism. In this case, the activities of the overseas agents were performed and consumed outside India in connection with export sales in North America. As a result, service tax could not be levied.
For the period from July 2012 to September 2014, the Tribunal observed that Lifelong India had only made book provisions and had not paid any commission. It held that service tax arises only when services are actually received and consideration is paid. In the absence of both, no liability could be fastened. However, it noted that the company’s claim that such provisions were later reversed would require factual verification.
For the period after 1 October 2014, the bench pointed out that overseas commission agents would fall within the definition of “intermediary” under the Place of Provision of Services Rules. In such cases, the place of provision is the location of the service provider. Since the agents were located outside India, service tax was not payable.
The Tribunal also took note of the argument that the adjudicating authority had gone beyond the scope of the show cause notice by confirming tax on provisionally booked amounts, even though the notice was confined to commission actually paid.
Considering both factual and legal aspects, the Tribunal set aside the impugned order confirming service tax, interest, and penalty, and remanded the matter to the original adjudicating authority for fresh adjudication. The authority has been directed to give Lifelong India an opportunity to produce documents to establish non-receipt of services and non-payment of consideration. The appeal was allowed by way of remand.
Case details : M/s Lifelong India Private Limited v. Commissioner, Central Goods and Services Tax, Dehradun (Service Tax Appeal No. 51005 of 2021, decided on 6 February 2026); appearance: for the appellant, Charanya Lakshmi Kumaran, Advocate; for the respondent, Mehboob Ur Rehman, Authorised Representative.
